Home

Textbook Notes (240,830)

CA (162,227)

Western (17,671)

ECON (688)

ECON 1022A/B (216)

Jeannie Gillmore (107)

Chapter 29

Economics 1022A/B Chapter Notes - Chapter 29: Deficit Spending, Autarky, Real WagesPremium

by OneClass1274054

9 pages68 viewsSpring 2017

School

Western University

Department

Economics

Course Code

Economics 1022A/B

Professor

Jeannie Gillmore

Chapter

This preview shows pages 1-3. to view the full 9 pages of the document.

Chapter 29 Fiscal Policy

Fiscal Policy – the use of the federal budget to achieve macroeconomic objectives such as full

employment, sustained long-term economic growth, and price level stability

THE FEDERAL BUDGET

- Federal budget: annual statement of revenues and outlays of

the Government of Canada

together with the laws and regulations that approve and support those revenues and

outlays

· Purpose = to finance the business of government and to pursue government’s fiscal

policy

- Provincial budget: annual statement of revenues and outlays of a

provincial government

together with the laws and regulations that approve or support those revenues and outlays

- Three main items in a federal budget are:

· Revenues  $262 billion in 2013

➢ Personal income taxes – largest revenue source

➢ Corporate income taxes – smallest revenue source

➢ Indirect and other taxes

➢ Investment income

· Outlays  $276 billion in 2013

find more resources at oneclass.com

You're Reading a Preview

Unlock to view full version

Subscribers Only

Only half of the first page are available for preview. Some parts have been intentionally blurred.

Subscribers Only

➢ Transfer payments (payments to individuals, businesses, other levels of government,

and rest of the world)

➢ Expenditure on goods and services (government expenditure on final goods/services;

➢ Debt interest (interest on government debt)

· Budget balance = Revenues – Outlays

➢ Revenues > outlays, government has a budget surplus

➢ Outlays > revenues, government has a budget deficit

➢ Revenues = Outlays, balanced budget

- Government debt = sum of past deficits – sum of past surpluses

· When government budget is in deficit, government debt increases

· When government budget is in surplus, government debt decreases

NX = S – I + T – G

T = NX-S+I+G

find more resources at oneclass.com

You're Reading a Preview

Unlock to view full version

Subscribers Only

Only half of the first page are available for preview. Some parts have been intentionally blurred.

Subscribers Only

SUPPLY-SIDE EFFECTS OF FISCAL POLICY

- A decrease in taxes can affect incentives and can increase aggregate supply

· Cut in income tax increases supply of labour

· Cut in capital taxes increases investment and saving

find more resources at oneclass.com

You're Reading a Preview

Unlock to view full version

Subscribers Only

Loved by over 2.2 million students

Over 90% improved by at least one letter grade.