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Fiscal Policy
SECTION 1: Defining Fiscal Policy
SECTION 2: Fiscal Policy Strategies
SECTION 3: Fiscal Policy and
the Federal Budget
1
SECTION 1
Defining Fiscal Policy
Objectives:
What role do taxes play in fiscal policy?
What kinds of tax rates do governments set?
Which taxes are the most profitable?
2
SECTION 1
Defining Fiscal Policy
3
SECTION 1
Defining Fiscal Policy
4
SECTION 1
Defining Fiscal Policy
5
SECTION 2
Fiscal Policy Strategies
Objectives:
How do supply-side and demand-side
theories differ?
What are the chief tools of fiscal policy?
What factors limit the success of fiscal
policy?
6
SECTION 2
Fiscal Policy Strategies
Differences between supply-side and
demand-side theories
Supply-side economics:
focuses on achieving economic growth and stability by
increasing product supplies
calls for limited government economic involvement
Demand-side economics:
focuses on achieving economic growth and stability by
increasing aggregate demand
calls for active government economic involvement
7
SECTION 2
Fiscal Policy Strategies
8
SECTION 2
Fiscal Policy Strategies
9
SECTION 3
Fiscal Policy and the Federal Budget
Objectives:
How is the federal budget developed?
What role does deficit spending play in the
U.S. economy?
What methods can the government use to
balance the federal budget?
10
SECTION 3
Fiscal Policy and the Federal Budget
12
SECTION 3
Fiscal Policy and the Federal Budget
13
CHAPTER 15
Wrap-Up
1. Explain why federal, state, and local governments
collect taxes, and provide an example of each of the
following: proportional tax, progressive tax,
regressive tax.
2. How did John Maynard Keynes influence economic
thought?
3. What tools do lawmakers use to enact fiscal policy?
4. Describe the process of developing and approving
the federal budget,
5. What actions might the government take to balance
the federal budget?
14