PUP-3002 Lecture Notes - Lecture 8: Sales Tax, Regressive Tax, Tax Rate
Document Summary
Concepts: iscal policy-keynesianism, supply side economics, budget process, enitlement/discreionary spending, income tax, capital gains tax. The sum of all taxing and spending policies. Seing the budget determines what taxing and spending will be like in the coming year. Reasons: lawmakers like to provide goods, but don"t like to raise taxes to pay for them, can use the budget as a tool to control the macro economy. Gdp= c+i+g+nx: increase g and increase gdp. Counter-cyclical- opposite the cycle of the economy: sluggish economy- economic simulus run a deicit (increase spending or decrease taxes, growing economy- create budget surpluses (raise taxes or decreases spending) pay down the debt, reduce inlaion. Examples of keynesianism republicans/ democrats don"t it into a keynesian/non-keynesian boxes. George w. bush: post 911 tax cuts to simulate the economy, 2008 housing crises starts massive spending. Obama: american recovery and reinvestment act 2009. Most keynesians think we needed 2 trillion: about 2/3 macroeconomists agree.