Macroeconomics 02/19/16 and 02/22/2016
Macroeconomics 02/19/16 and 02/22/2016 Economics 111
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This 3 page Class Notes was uploaded by amber weiss on Tuesday February 23, 2016. The Class Notes belongs to Economics 111 at Southern Illinois University Edwardsville taught by Mary Anne Pettit in Spring 2016. Since its upload, it has received 15 views. For similar materials see Macroeconomics in Economcs at Southern Illinois University Edwardsville.
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Date Created: 02/23/16
Macroeconomics 02/19/2016 The Role of the Government Role of the Government: mixed capitalisms - Mixed capitalism: allocate resources by market, supply, demand and government - 3 levels of government (NOT BRANCHES) 1. National/Federal 2. State 3. Local government - What is a budget? Plan for spending Plan for expernditures (outlays) and tax collections (tax revenues or tax receipts) What should we include? Income and expenses At the end of the month, if you are spending more than you have coming in, you can only do 2 things… 1. cut expenses 2. more income - Balanced Budget Government expenditures (outlays) EQUAL tax revenues Spending that goes out is EQUAL to money coming in - Budget surplus Tax revenues EXCEED government expenditures Tax collection is greater than spending (outlays) Budget deficit - Government expenditures exceed tax revenues - Spending more than tax revenues - What we live with! - Fiscal year vs. calendar year st Federal fiscal: October 1, 2015 – September 30, 2016 - 1 step of federal budget process: President submits his budget to congress, his plan for taxes and spending money Usually somewhere from February to Mthch From February to September 30 , they write, amend or change the president’s plan. Has to pass both house and congress and be signed by the president When it is an election year: November 2016, pass budget instead of extending - Deficit fun facts of fiscal year 2015 Outlays/expenditures: $3.7 trillion spent Tax receipts: $3.2 Trillion Federal budget deficit for 2015: $-438 billion How high will deficit go in 2016? 2017? - Depends on how much federal government spends and collects in taxes - Fiscal year 2015 (estimated) : $-582 billions [actual: -438billion] - FY 2016 (est.) : $ -615 billion - FY 2017 (est.) : $ -503 billion - These estimates make assumptions about health of the economy, federal spending and taxes Macroeconomics February 22, 2016 The public or national debt - Very important: BUDGET DEFICIT vs. NATIONAL DEBT - Federal budget deficit: calculated YEARLY $-438 billion - National Debt: sum of ALL past budget deficits Current national debt (est.) : $19 trillion - Congress establishes a statutory debt limit: $18.1 trillion - This debt limit or debt ceiling caps the borrowing or authority of federal government - - - - - A BIG DEAL Statutory debt limit - Statutory debt limit (debt ceiling) DIFFERENT than price ceiling - Should debt ceiling be raised? Tempers flare over debt ceiling, budget and ACA (affordable care act) - Current: what is happening now? November 2, 2015 current debt limit suspended to accommodate debt through March 16, 2017 FOR NEW PRESIDENT How would you spend more than you had coming in each month? - How does federal government do it? We borrow, we go into debt, a lot of debt - Why? It is fun to spend money! It is even more fun to spend other people’s money! - Why save money? TOO SPEND IT LATER
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