 Created by the President  House & Senate analyze & recommend changes  Finally passed by both houses

 Individual Income taxes  Corporate income taxes  Excise taxes - “Sin” taxes

 Progressive tax – tax burden falls more heavily on wealthy then the poor. › Ex. Income taxes  Regressive tax – tax burden (as a %) falls more on the poor then the wealthy › Ex. Sales tax

 Sales tax  Property tax  Individual Income tax  Excise tax “sin tax”  Lottery  Bonds  Inheritance & Estate Taxes  User Fees

 Carried out by legislative & executive branches  Includes tax policy & government spending  Economic Effect: › Alter growth rate of GDP  Expansionary Policy › Speed up GDP growth › Tax cut or increase in spending will stimulate growth and lower unemployment  Restrictive Policy › Raising taxes and/or cutting government spending to slow growth and lower inflation

 Carried out by the Federal Reserve  Federal Reserve is part of the bureaucracy  Create policy to counteract actual or anticipated undesirable changes in the economy

 Controlling the money supply › Increasing or decreasing $ available to banks › Buying or selling government bonds  Controlling the Fed Fund Rate › Interest rate that they loan money to banks › If they lower the rate then banks should lower the interest rates for us.

 Money Supply › Increase the money supply › More money = more borrowing = more spending = increased GDP, increased employment etc.  Federal Fund Rate › Decrease fed fund rate › Low interest rates = more borrowing = etc.

 Money Supply › Decrease the money supply › Less $ = less borrowing = less business opportunities = less spending = decreases GDP, inflation,  Federal Fund Rate › Increase the interest rate › Same chain of events