ECON 1010 Chapter 29: Chapter 29 notes

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4 Apr 2016
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Chapter 29: fiscal policy: involves changes in taxes and spending by the government, to achieve. Federal budget: the annual statement of the outlays (expenditures) and revenues of the government of canada. Budget surplus = revenues outlays > 0. Budget deficit = revenues outlays < 0. Balanced budget = revenues outlays = 0. Government revenues: personal income taxes, corporate taxes, indirect taxes (taxes on gasoline) Government expenditures: transfer payments (unemployment cheques, expenditures on goods and services, debt interest payments. Deficit and debt: deficit budget deficits add to the govt debt, debt- the total amount of gov. borrowing. Demand side effects of tax changes: tax increases decrease disposable income and decrease aggregate demand, as a result, the ad curve shifts out and to the right. Fiscal policy is used as a tool to stabilize the business cycle: fiscal policy actions work by changing aggregate demand.

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