SS 141 Chapter Notes - Chapter 5: Interest Rate, Capital Market, Balanced Budget Amendment
Document Summary
Federal, local and state governments all have budgets (show how much revenue government expects to receive in taxes and other income that government plans to spend. How federal government taxing and spending affects ad. Short-run government uses tax and spending policies to address recession, unemployment and inflation. Budget deficit-when the federal government spends more money than it receives in taxes in a given year. Budget surplus-government receive more money in taxes than they spend. Us experienced largest budget deficit in 2009 (spend . 4 trillion more than it collected in taxes) Government borrows funds in order to cover its budget deficits (sells securities like. Treasury bonds, notes and bills) promising to repay back with interest. Interest rate on federal government borrowing used to be more than 3% but now it is. Federal spending categories (account for 71% of federal spending and 29% for international affairs, science and technology, natural resources and environment, etc: national defense, social security, health programs, interest payments.
