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04.05 Uncle Sams Toolbox

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Amber A.

on 22 April 2015

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Transcript of 04.05 Uncle Sams Toolbox

1. Define fiscal policy. Include the goals and tools of fiscal policy and the entity that controls it.
Part One
04.05 Uncle Sams Toolbox
Scenario 1: The government is currently spending three billion, one hundred million on programs and brings in three billion, five hundred million through taxation.
Part Two
6. What are the benefits and opportunity costs of the changes you propose?
The benefit of taxation would be that the government would be making more money. It might cause issues with economic growth because people would be having to pay more in taxes, prices would range all over the place and people might become unemployed.
8. As a member of Congress, what changes would you suggest to fiscal policy to balance the budget?
As a member of Congress, I would decrease the amount of spending and raise taxes to have the government gain more money.
10. How might your efforts to balance the budget conflict with efforts to decrease unemployment, if at all?
My efforts to balance the budget would conflict with efforts to decrease unemployment. I think the unemployment rate would get worse.
12. What are the benefits and opportunity costs of the changes you propose?
The cost would be a higher unemployment rate, and the benefit would be slow inflation.
2. Compare and contrast fiscal and monetary policy.
Fiscal policy is a tool of the federal government through the legislative and budget process. The federal government has control through Congress. Monetary policy, on the other hand, is a tool of the Federal Reserve. The Federal Reserve doesn't need permission from Congress or the president to make policy changes. Both policies have to meet economic goals. Fiscal policy involves taxing and spending to meet economic goals, while monetary policy involves the Federal Reserve monitoring and controlling the U.S. money supply to meet economic goals.
Fiscal policy has to deal with government earning and spending money. The tools of fiscal policy are spending and taxing. The goal is to create demands in the economy so that businesses produce more.
3. Should the government create a law mandating a balanced federal budget?
A Federal budget is a plan or record of income and expenses each year. With that in mind, I do think the government should create a law mandating a balanced federal budget. The government can always use an extra bit of organization and a budget can possibly prevent us from falling into further debt.
5. As a member of Congress, what changes would you suggest to fiscal policy to balance the budget? Explain at least two ways you would use the tools of fiscal policy to balance the budget by recommending an "increase" or "decrease" to each tool in your explanation.
As a member of congress, I would use the tools of fiscal policy to balance the budget by recommending an increase on taxes. Also, I would recommend a decrease on the amount the government spends.
7. Does this create a budget surplus or deficit? Explain.
This creates a budget deficit. This is because the government is spending more money than what is being given to them.
9. What are the benefits and opportunity costs of the changes you propose?
In this scenario, I think the cost would be having people pay more in taxes and the unemployment rate would rise. But the benefit would be more price stability if the budget is balanced.
11. As a member of Congress, what changes would you suggest to fiscal policy to balance the budget and indirectly address inflation? Suggest at least two specific changes to revenue and expenditures.
As a member of Congress, I would recommend an increase in taxes and reduce government spending.
13. Are the proposed policies contractionary or expansionary? Explain.
A contraction is phase of business cycle with decreasing economic activity. With that in mind, increasing taxes would be a contractionary action, which can help slow down inflation.
4. Does this create a budget surplus or deficit? Explain.
This creates a budget surplus. This is because the government is bringing in more money through taxation than it is spending it.
Scenario 2: The government is currently spending three billion, seven hundred million on programs and brings in two billion, nine hundred million through taxation. In addition, the nation has experienced a period of rising unemployment.
Scenario 3: The nation is currently experiencing a period of rising prices. Inflation is making consumer goods increasingly difficult to afford as wages have remained constant.
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