Financing Government Chapter 16

Fiscal and Monetary Policy Section 4 Fiscal and Monetary Policy

Economic Goals U.S. Has largest and most complex economy in the world. Administrative success often tied to perceptions of economic success Goals: Full employment, price stability, and economic growth.

Fiscal and Monetary Policy The government uses the power to tax and spend to try and achieve its economic goals. Federal spending accounts for about 20% of nation’s GDP More federal spending = more economic activity Higher taxes = less money consumers can spend The government also uses its power over the U.S. currency to achieve economic goals. Money supply and available credit Fed uses money supply to influence interest rates.