ECON102 Chapter Notes - Chapter 29: Aggregate Supply, Aggregate Demand, Parliament Acts 1911 And 1949
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ECON102 Full Course Notes
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Document Summary
Fiscal policy the use of the federal budget to achieve macroeconomic objectives such as full employment, sustained long-term economic growth, and price stability. Largest source of revenue: paid by individuals on their income, corporate income taxes. Smallest source of revenue: taxes paid by companies on their profits. Includes the harmonized sales tax (hst) and taxes on the sale of gasoline, alcoholic drinks, a few other items. Income from government enterprises and investments: outlays, transfer payments. Increases borrowing, larger debt, larger interest payments, larger deficit and larger debt: a persistent budget surplus creates a virtuous cycle of falling interest payments, larger surpluses, and declining debt, debt and capital. Some government debt has been incurred to finance public consumption expenditure. Income tax weakens the incentive to work and drives a wedge between take-home wage for workers and the cost of labour for firms: decreases supply of labour.