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Published byFelicity Black Modified over 8 years ago
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Created by the President House & Senate analyze & recommend changes Finally passed by both houses
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Individual Income taxes Corporate income taxes Excise taxes - “Sin” taxes
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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
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Sales tax Property tax Individual Income tax Excise tax “sin tax” Lottery Bonds Inheritance & Estate Taxes User Fees
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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
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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
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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.
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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.
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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
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