Fiscal policy


Gov't can stabilize the economy by

Fiscal Policy- action by congress to stabilize the economy.

Changes in the expenditures or tax revenues of the federal gov't
.
2 tools
Taxes- gov't cant increase or decrease
Spending- gov't can increase or decrease

FP is enacted to promote por nation's economic goals: full employ., price stability, economic growth.

Deficits, Surpluses, and Debts
Balanced
Revenues= Expenditures
Budget Deficit
Revenues < Expenditures
Budget Surplus
Revenues > Expenditures
Gov't Debt= sum of all deficits- sum of all surpluses