ECONOMIC POLICY A BRIEF OVERVIEW HONORS GOVERNMENT.

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ECONOMIC POLICY A BRIEF OVERVIEW HONORS GOVERNMENT

TWO TYPES OF POLICY FISCAL POLICY TAXING AND SPENDING CONSIDERATIONS. FISCAL POLICY IS CONDUCTED BY CONGRESS AND THE PRESIDENT. MONETARY POLICY REGULATION OF MONEY SUPPLY BY THE FEDERAL RESERVE BOARD (“THE FED”) ADJUSTING INTEREST RATES TO INCREASE OR DECREASE INFLATION.

TAXING TWO TYPES: PROGRESSIVE TAXES A TAX THAT RISES IN PERCENTAGE TERMS AS INCOME RISES CAN ANYONE GIVE AN EXAMPLE? INCOME TAX REGRESSIVE A TAX THAT FALLS IN PERCENTAGE TERMS AS INCOME RISES CAN ANYONE GIVE AN EXAMPLE? SALES TAX

SPENDING WHERE IS THE MONEY SPENT? DIRECT BENEFIT PAYMENTS TO INDIVIDUALS (SOC. SECURITY, MEDICARE, MEDICADE, ETC.) APPROX. THIS IS MANDATORY OR NON-DISCRETIONARY SPENDING NATIONAL DEFENSE – APPROX. 18% (DESCRESIONARY) NET INTEREST: APPROX. 6% IS NON-DESCRESTIONARY NON-DEFENSE DISCRETIONARY SPENDING GRANTS TO STATES, FEDERAL OPERATIONS, ETC.) APPROX. 17%

ENTITLEMENTS ALSO KNOWN AS “UNTOUCHABLES” FEDERAL MONEY THAT IS: PROVIDED TO THOSE WHO MEET ELIGIBILITY REQUIREMENTS AUTOMATICALLY SPENT EACH YEAR WITHOUT CONGRESSIONAL REVIEW SOME HAVE A BUILT IN “COLA” WITHOUT AN ANNUAL REVIEW EXAMPLES WOULD BE MEDICARE, SOCIAL SECURITY, FEDERAL PENSIONS THESE ACCOUNT FOR MORE THAN TWO-THIRDS OF THE FEDERAL BUDGET

DEFICIT SPENDING BUDGET DEFICIT: INCURRED WHEN GOVERNMENT EXPENDITURES (SPENDING) EXCEEDS REVENUE (INCOME) DURING A ONE YEAR PERIOD WHAT SOLUTION CAN YOU PROPOSE TO STOP THAT PROBLEM? NATIONAL DEBT: THE AMOUNT OWED BY THE FEDERAL GOVERNMENT (THE ACCUMULATION OF PAST BUDGET DEFICITS) SO WHAT IS OUR DEBT?OUR DEBT