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    The document discusses key aspects of fiscal policy and government budgets, including: 1) It outlines different states a government budget can be in, such as a balanced budget, budget surplus, or budget deficit. 2) It explains demand-side and supply-side fiscal policy approaches and tools like changes to government spending, taxation, and transfers that can affect aggregate demand. 3) It also discusses budget projections, public debt, the Laffer curve theory on tax revenues, and factors that influence fiscal policy transmission and effectiveness.

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    The document discusses key aspects of fiscal policy and government budgets, including: 1) It outlines different states a government budget can be in, such as a balanced budget, budget surplus, or budget deficit. 2) It explains demand-side and supply-side fiscal policy approaches and tools like changes to government spending, taxation, and transfers that can affect aggregate demand. 3) It also discusses budget projections, public debt, the Laffer curve theory on tax revenues, and factors that influence fiscal policy transmission and effectiveness.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    3 views1 page

    Concept Map

    Uploaded by

    21800675
    The document discusses key aspects of fiscal policy and government budgets, including: 1) It outlines different states a government budget can be in, such as a balanced budget, budget surplus, or budget deficit. 2) It explains demand-side and supply-side fiscal policy approaches and tools like changes to government spending, taxation, and transfers that can affect aggregate demand. 3) It also discusses budget projections, public debt, the Laffer curve theory on tax revenues, and factors that influence fiscal policy transmission and effectiveness.

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    of 1

    FEDERAL

    BUDGET FISCAL POLICY

    Balanced Budget
    Government
    GOVERNMENT SUPPLY-SIDE
    Transfer
    Payments EXPENDITURE DEMAND-SIDE
    Changes in consumption, investment, government
    purchases, and net exports can all affect aggregate
    STATES OF demand, shifting the AD curve.
    GOVERNMENT Budget Surplus
    Fiscal Policy: Keynesian
    Government BUDGET Shifting the Aggregate Perspective Marginal Tax Rates and
    Purchases Demand Curve Aggregate Supply Marginal (Income) Tax
    GOVERNMENT BUDGET
    The economy is not self regulating Rate
    TAX REVENUE PROJECTIONS Public Debt

    Lags Change in person's tax


    Subsidy VS Tax Deduction Budget Deficit Data payment
    Change in taxable income
    Structural
    Crowding Out Effectiveness Laffer Curve
    Impose Revenue-Generating
    Taxes and Fees

    Cyclical 0% or 100% Tax Rates


    Transmission
    Income Tax Structures Value-Added Tax

    Direct Effect
    Wait-and-see ? Tax Revenues are zero

    Legislative Tax Revenue


    Indirect Effect
    Progressive Major points of the Laffer
    Type of Crowding Curve Increase in Tax Rates
    Income Tax Regressive Tax Part Value Added
    Income Tax Part
    ? Increase in tax revenues

    Proportional
    Income Tax Tax Base
    Zero Crowding Tax Rate
    Incomplete
    Decrease in Tax Rates
    Out
    Crowding Out
    ? Increase in tax revenues

    Complete
    Crowding Out

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