Courtney Bristow, Justin Dueker, Allie Romig, Andrey Kibukevich Economic Policy Courtney Bristow, Justin Dueker, Allie Romig, Andrey Kibukevich

Economic Theory A theory of commercial activities such as the production and consumption of goods

Creation of Economic Policy President National Economic Council House Ways and Means Committee Federal Reserve System

Presidents and the Economy Republican presidents are less likely to propose and create economic policy Democratic presidents are more likely to propose and create economic policies

Federal debt vs. Federal Deficit Federal debt is the debt owed by a central government Federal deficit refers to the increase in debt over a particular year

Federal Reserve System Central banking system of the US Key objectives: maximum employment, stable prices, and moderate long-term interest rates

US Tax System Internal Revenue Service (IRS) Taxes are collected by federal, state and local governments Taxes include: income, payroll, property, sales, imports, estates and gifts, and various fees

Measuring the Economy Economic growth is measured by changes in GDP (gross domestic product) Economic growth is considered with long term trends in production *inflation and deflation must be taken into account when measuring GDP

Voting and the Economy Economic policy often drives elections Voters often blame a president or give one credit for the state of the economy during their term

Fiscal Policy vs. Monetary Policy Fiscal policy: government spending and taxes Monetary policy: determining the size of the money supply

2012 Fiscal Cliff 2% tax increase for workers End of tax breaks for businesses End of Bush tax cuts Spending cuts on over 1,000 government programs

Classical, Keynesian, Monetarist Classical (Adam Smith- 1800) Keynesian (John Maynard Keynes- 1930s) Monetarist (Milton Friedman- 1970s)