1. POLICY:
government rules

4. WHERE DOES THE BUDGET COME FROM?

5. 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

6. TWO EFFECTS OF A FEDERAL BUDGET:
EXPAND THE ECONOMY or

7. 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

8. 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

10. 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

11. 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

12. 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?