Fiscal Policy On Employment, Potential Gdp, And The Economic Growth Rate

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In Foundations of Macroeconomics Seventh Edition by Bade and Parkin, chapter sixteen is titled Fiscal Policy. There are three objects for the chapter. The first object is to be able to “describe the federal budget process and the history of tax revenues, outlays, deficits, and debts”. The second object is to “explain how fiscal stimulus is used to fight a recession”. The third objective is to “explain the supply-side effects of fiscal policy on employment, potential GDP, and the economic growth rate”. The federal budget has two main reasons it was created. The first is to fund the activities of the federal government. The second was and still is to attain macroeconomic objectives. In order to create the Federal Budget, the President of the United States is to propose a budget for the next year to Congress by each February. Next, the House and Senate proceed to go back and forth to determine a series of spending acts and overall budget. After everything is determined Congress will then pass the budget in September. The President then can sign the acts into law or veto the entire bill because he does not have the ability to veto certain parts of the act. The way to determine the government’s budget balance is to subtract the outlays from tax revenues. If the tax revenue is equal to the outlays, there will be a balanced budget for the government. If the tax revenue is less than the outlays, there will be a budget deficit for the government’s federal budget. If the
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