Macro Chap 29

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  1. Federal Budget
    annual statement of outlays and revs together w/ laws and regulations
  2. Fiscal Policy
    use of federal budget to achieve macro objectives (employment, growth, price level stability)
  3. Revenues
    • Come from 4 sourcesĀ 
    • 1. Personal income taxes
    • 2. corporate income taxes
    • 3. Indirect and other taxes (HST, taxes on gas, alcohol and others)
    • 4. Investment income
    • largest source is personal
  4. Outlays
    • 1. xfer pmtsĀ (pmts to individuals, businesses, govts and rest of world)
    • 2. expenditures on g/s (national defense)
    • 3. debt interest (on gov debt)
    • largest is xfer pmts (ex EI, farm subsidies)
  5. Gov Debt
    • total amount of gov borrowing
    • sum of past deficits minus sum of past surpluses
    • gov must borrow to finance its deficit
  6. Debt and Capital
    • main point of debt is to obtain capital (assets that will yield a return)
    • goal is to earn a return greater than interest on debt to obtain A
  7. Supply Side Effects of Fiscal Policy
    • no change in demand
    • labour supply curve moves left creating a tax wedge
    • LS changes b/c incentive to work is different. workers look at a/ tax take home rate and decide how much labour to supply
  8. Tax wedge
    • gap created b/w b/f tax and a/f tax wage
    • consumption taxes can be included b/c acts decreases amount of g/s each dollar can buy
    • ex. 25% tax and 10% hst. Tax wedge is 35%
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Macro Chap 29
2014-11-26 14:52:52
macro chap 29

Macro chap 29
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