POLICY: government rules

WHERE DOES THE BUDGET COME FROM?

Budget Process Agencies make a request OMB plugs in the numbers OMB send to the president President send to Congress and they debate and modify it Congress sends it back to the president President then signs it or vetoes it

TWO EFFECTS OF A FEDERAL BUDGET: EXPAND THE ECONOMY or

Expansionary Policies Increase Government Spending Cut Taxes GOVERNMENT PLACES ORDERS FIRM FILLS ORDERS FIRM CAN HIRE MORE WORKERS WORKERS EARN MONEY WORKERS SPEND MONEY MONEY SPENT CREATES MORE JOBS OVERALL DEMAND INCREASES PRICES RISE, PROFITS RISE ECONOMY EXPANDS

CONTRACTIONARY POLICIES: Decrease Government Spending Increase TAXES GOVERNMENTS CANCELS ITS ORDERS FIRMS HAVE AN EXCESS FIRMS CUT PRODUCTION FIRMS LAY OFF WORKERS HAVE LESS MONEY WORKERS SPEND LESS DEMAND DECREASES, ETC. PRICES FALL ECONOMY CONTRACTS CONSUMERS HAVE LESS MONEY TO SPEND FIRMS HAVE LESS MONEY TO SPEND FIRMS LAY OFF OR CUT WAGES DEMAND DECREASES PRICES FALL ECONOMY CONTRACTS

CLASSICAL ECONOMICS VS. KEYNESIAN ECONOMICS Adam Smith John Maynard Keynes BELIEVED THAT THE GOVERNMENT SHOULD INTERVENE IN ORDER TO PREVENT OR REVERSE RECESSION AND ENCOURAGE PRODUCTION AND GROWTH BELIEVED THAT THE FREE MARKET SHOULD RULE THE ECONOMY AND THE GOVERNMENT SHOULD NOT INTERVENE

OTHER FISCAL PHENOMENA AUTOMATIC STABILIZERS: TAXES and DIRECT AID (transfer payments) help keep the highs from being too high and the lows from being too low

THE NATIONAL DEBT: (budget deficit is yearly, nation debt is sum total) the sum total of all money owed to those who have purchased bonds from the United States government. What do you think?