In the United States, fiscal policy is directed by both the executive and legislative branches of the government. In the executive branch, the President and the Secretary of the Treasury, often with economic advisers’ counsel, direct fiscal policies.

The main goal of the creation of the federal budget is to decide how to manage the government’s tax revenue and expenditures.

What does deficit spending require a government to do? – a government’s budget deficit causes debt to increase. – debt requires a government to pay back more than it has borrowed. – the deficit is the amount a government spends above what it brings in.

A fiscal stimulus is a package comprising tax rebates and incentives. It’s used by the government to stimulate the economy and prevent the country from a financial crisis. A stimulus package provides tax rebates and boosts spending. As spending increases demand, it creates a situation where employment rises.

LRAS can shift if the economy’s productivity changes, either through an increase in the quantity of scarce resources, such as inward migration or organic population growth, or improvements in the quality of resources, such as through better education and training.

Demand side policies include: Fiscal policy (cutting taxes/increasing government spending) Monetary policy (cutting interest rates)

In general, demand-side policies aim to change the aggregate demand in the economy. We tend to use demand-side policies for short-term changes – if inflation is getting too high, we can increase interest rates to cool the economy down. Demand-side policies may be expansionary or contractionary.

From the firm’s perspective, taxes or regulations are an additional cost of production that shifts supply to the left, leading the firm to produce a lower quantity at every given price. Government subsidies, however, reduce the cost of production and increase supply at every given price, shifting supply to the right.

This is helpful as it guarantees the general administration of the companies is overseen and cared for by the administration organizations. Stricter standards and government mediation would rule out extortion. Therefore, government participation in business system is good.

The premise is an open society where society and government both take a hand in building relationships with business. For example, N&N uses lobbying and influence to affect regulations in government. The government uses regulations and leadership to maintain control over N&N and protect society.