The document discusses macroeconomics and fiscal policy. It covers topics like government budgets, taxes, spending, deficits, debt, and how fiscal policy tools like taxes and spending can be used to increase or decrease aggregate demand. It provides information on different types of taxes and explains concepts like balanced budgets, deficits, debt, and crowding out.

2. Lecture 16
Macroeconomics

3. Opening
Prayer

4. Quiz Master

5. Economics Club
Marin Ama
marinama123@go.byuh.edu
Activities
Have Fun, Get Smart

6. Chapter 17
The Government Budget
Taxes and Spending

7. Two Objectives
Unemployment
Inflation

8. Monetary
Central Bank
Tools
Reserve Ratio
Discount Rate
Open Market
Excess Reserve Rate
Fiscal
Government
Tools
Taxes
Spending
Aggregate Demand
Aggregate Demand
Aggregate Supply

11. Tax Revenues
Income Taxes
Social Security Taxes
Other

12. Types
Per Head
Flat
Progressive

14. Corporate Tax Rate
21% Flat Rate

15. Progressive
The more you earn, the
higher the rate

16. Types
Income
Sales
VAT
Property
Excise

17. De
fi
cits and Debt
Government
Spending and
Revenue

18. De
fi
cit
Spending greater
than revenue

19. Balanced Budget
Spending exactly
equals revenues

20. Surplus
Revenue greater
than spending

21. Debt
Accumulated deficits

22. Debt
$24 trillion
$72,700 per person

24. Why would you want
government to go into
debt?
Don’t have to pay
Future larger economy

25. Debt
Investment
Only if the return is
higher than the
interest rate

26. Chapter 18
Fiscal Policy

27. P4
Price
Level
Real GDP orY
Fiscal Policy and Negative Supply Shock
18
Long Run
Aggregate
Supply Short Run
Aggregate
Supply
19
P1
Aggregate
Demand
17
P2
P3
In
fl
ation and
Recession
Stag
fl
ation

28. P2
Price
Level
Real GDP orY
Increase Aggregate Demand
Lower Taxes and/or Increase Spending
18
Long Run
Aggregate
Supply
Short Run
Aggregate
Supply
19
P1
Aggregate
Demand
17
Unemployment

29. P3
Price
Level
Real GDP orY
Decrease Aggregate Demand
Raise Taxes and/or Decrease Spending
18
Long Run
Aggregate
Supply
Short Run
Aggregate
Supply
19
P1 Aggregate
Demand
17
In
fl
ation

30. Where does
government get
money?
Crowding Out

31. More Taxes
Cancel
No effect

32. More Borrowing
Crowding Out
Increase interest
rates

33. Lower Taxes
People may just save
more and not spend

34. More Spending
Now get free stuff.
No new spending

35. Get a free iPhone
But your taxes
will go up to
pay for it
No change in total
spending

36. Where does
government get
the money?