Taxes & Federal Budget
The Primary way the government collects $ it operate and function
What is Taxes?
What is Federal Tax
Governments influence over economy with taxing and spending
What is Fiscal Policy
The central bank of the US
What is the Federal Reserve Bank?
Government can use this to promote 3 goals, full employment, stable prices and economic growth
What is Monetary Policy?
The Tax on consumer products. (Paid by the consumer at the time of purchase)
What is Sales Tax?
Congress can control the amount of money they put into these expenses
What is Discretionary?
Controls Fiscal Policy
What is Congress and the President of the United States?
Determines the interest rate and regulates money supply
What is the Board of Governors?
More money will circulate which is meant to spur economic growth (Lower Reserve Requirement)
What is the Easy Money Policy
As income leaves increase, tax increases
What is Progressive Tax?
Shortfall of a year budget, spending exceeds revenue
What is Budget Defecit?
What is Supply-Side Fiscal Policy?
Monitor for financial risk and supervise bank and financial holding companies
What is the 12 Federal Reserve Banks
Banks are required to keep a fraction of the deposits on hand
What is Fractional Reserve System?
Largest part in the US Budget
What is Social Security?
Total amount of money borrowed (34 Trillion)
What is National Debt?
Increase in GDP & Employment by stimulating demand, Unstable business spending declines growth. (Government stimulation by spending)
What is Keynesian Economics? (Demand Side Fiscal Policy)
Sets monetary policy by managing open market operations
Restrict money supply to try and slow down the economy, Reserve Requirement is higher
What is Tight Money Policy?
Social Security, Health and Interest are under this category.(Federal Government must pay out, uncontrollable expenses)
What is Mandatory Taxes?
Very difficult to out spending in program, Government is required to make laws to solve problems, Large part of budget is mandatory spending. Unpredicted expenses
What is the reasons for budget deficits?
when increased or changed, causes increases or changes in many other related economic variables. Eg. Solar Panels
What is the Multiplier Effect?
The three key entities in the Federal Reserve Bank
the Board of Governors, 12 Federal Reserve Banks, and the Federal Open Market Committee
Lower interest rate for more loans, fed buys bonds lowers reserve ratio
What is the Monetary Policy Tools? ( Discount Rate, Reserve Requirement)