Session 11 Fiscal Policy Disclaimer: The views

Transcript:Session 11 Fiscal Policy Disclaimer: The views:
Session 11 Fiscal Policy Disclaimer: The views expressed are those of the presenters and do not necessarily reflect those of the Federal Reserve Bank of Dallas or the Federal Reserve System. TEKS (15) Economics. The student understands the economic impact of fiscal policy decisions at the local, state, and national levels. The student is expected to: (A) identify types of taxes at the local, state, and national levels and the economic importance of each; (B) analyze the categories of revenues and expenditures in the U.S. federal budget; and (C) analyze the impact of fiscal policy decisions on the economy. (6) Economics. The student understands the basic characteristics and benefits of a free enterprise system. The student is expected to: (D) analyze the costs and benefits of U.S. economic policies related to the economic goals of economic growth, stability, full employment, freedom, security, equity (equal opportunity versus equal outcome), and efficiency. Teaching the Terms Fiscal Policy Government spends money to provide goods and services Government pays for those expenditures through taxation and borrowing Externalities Benefits or costs from a transaction extend beyond the buyer or seller Positive externalities Education Technology spillovers or patent protection Negative externalities Pollution Potential Market Failures Catagorize Cable TV Clothing Congested non-toll roads Congested toll roads Environment Fire protection Fish in the ocean Ice cream National defense Tornado siren Uncongested non-toll roads Uncongested toll roads Potential for Market Failure Public goods are subject to a free-rider problem Lighthouse, basic research Common resources can lead to the tragedy of the commons Clean air and water, congested cities Role of property rights Federal Government: Receipts Individual income taxes Social insurance taxes Corporate income taxes Other Federal Government: Spending Social Security National defense Income security Medicare Health Net interest Other Federal Government Revenue Source: Final Monthly Treasury Statement for FY2009 Federal Government Funding Source: Final Monthly Treasury Statement for FY2009 Federal Government Expenditures Note: “Other” includes many agencies, such as Transportation, Housing and Urban Development, Education, Homeland Security, Justice, Energy, State, NASA, International Assistance Programs, Interior, Commerce, EPA and Corps of Engineers Source: Final Monthly Treasury Statement for FY2009 State Government Revenue http://www.census.gov/prod/2009pubs/10statab/stlocgov.pdf Texas Revenue Insurance trust includes unemployment, retirement and workers comp funds State Government Expenditures http://www.census.gov/prod/2009pubs/10statab/stlocgov.pdf Texas Expenditures Local Governments Revenue http://www.census.gov/prod/2009pubs/10statab/stlocgov.pdf Local Government Expenditures http://www.census.gov/prod/2009pubs/10statab/stlocgov.pdf Structure of Taxes Structure of Taxes Budget Lingo Deficits and Debt Government must borrow money when it runs a budget deficit Government