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- 3. Final Exam Review Chapters 17-21 Sec. 1: Tuesday 11:00am -1:50pm Sec. 1: Thursday 2:00pm - 4:50pm
- 4. Final Exam Review Re-Read the Textbook Review Quizzes Review Lecture Slides Review Notes Talk with other students
- 5. Chapter 17 The Government Budget Taxes and Spending
- 8. Deficits and Debt Government Spending and Revenue
- 10. Balanced Budget Spending exactly equals revenues
- 13. Why would you want government to go into debt? Don’t have to pay Future larger economy
- 14. Debt Investment Only if the return is higher than the interest rate
- 15. How to reduce deficits Higher taxes Lower spending
- 16. Solution to Debt Economic Growth
- 17. Spending Taxes Aggregate Demand Expand Increase Decrease Right Contract Decrease Increase Left Fiscal Policies
- 19. 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
- 20. 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 Inflation
- 23. More Borrowing Crowding Out Increase interest rates
- 24. Lower Taxes People may just save more and not spend
- 25. More Spending Now get free stuff. No new spending
- 26. Boom-Bust Cycle Income Borrow Pay Back Spending Spending More than Income Spending Less than Income
- 27. Tax Rate % $ Tax Revenue Laffer Curve 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Dropped Top Marginal Income Tax Rate from 70% to 28%
- 28. Supply Side Tax Changes Lower marginal tax rates incentivize people to work more and firms to create more.
- 29. 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 Inflation and Recession Stagflation
- 30. P3 Price Level Real GDP orY Increase Long Run Aggregate Supply Lower Marginal Tax Rates 18 Long Run Aggregate Supply Short Run Aggregate Supply 19 P1 Aggregate Demand 17 Lower Prices Increase Output
- 31. Time Lags Do you really know? Congress approve Effect lag Take 1- 3 years Counterproductive
- 32. Multiplier May not be as large as Keynes calculated
- 35. $0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20 0 1 2 3 4 5 6 7 8 9 10 Demand Quantity Consumer Surplus Producer Surplus ($10 x 5) ÷ 2 = $25 ($10 x 5) ÷ 2 = $25 Total Surplus $50
- 36. Consumer Surplus $0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20 0 1 2 3 4 5 6 7 8 9 10 Demand Quantity ($14 x 7) ÷ 2 = $49 ($6 x 3) ÷ 2 = $9 Total Surplus = $58 Producer Surplus Local 3 Foreign 4
- 37. $0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20 0 1 2 3 4 5 6 7 8 9 10 Demand Quantity Pizza Tariff Local 4 Foreign 2 $2 Tariff With Tariff Consumer Surplus Producer Surplus ($12 x 6) ÷ 2 = $36 ($8 x 4) ÷ 2 = $16 Total Surplus $52 Tariff $2 x 2 = $4 $1 x 2 = $2
- 41. one unit of this will buy ___ units of that
- 42. Why buy Dollars? Buy American Stuff Invest in America Hold and Hope
- 43. Demand Dollars Yuan Per Dollar Supply Higher U.S. Interest Rate 6.44 6.50 Depreciating Cost more to buy a dollar Losing Value
- 44. Demand Dollars Yuan Per Dollar Supply Lower U.S. Interest Rate 6.44 6.25 Appreciating Cost Less to buy a Dollar Gaining Value
- 45. Arbitrage The Law of One Price
- 46. Economics The study of how human beings create value for one another
- 47. The time required to work to pay for one hour of light in 1820 will now produce 135,000 hours or 15.4 years
- 48. On what basis is it that having seen all this progress that we have made behind us we see nothing but misery in front of us? -Thomas Maccaulay
- 52. All Human Beings—male and female —are created in the image of God. Each is a beloved spirit son or daughter of heavenly parents, and, as such, each has a divine nature and destiny. FAMILY - A Proclamation to the World
- 53. For the earth is full, and there is enough and to spare; yea, I prepared all things, and have given unto the children of men to be agents unto themselves. Doctrine and Covenants 104:17 Year: 1834