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Federal State & local governments Essay

Federal State & local governments Essay.

Federal State & local governments Essay

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Chapter 3: Government, the Economy, and Economic Development

1.    What is the economic policy of the federal, state, and local governments in the United States?

2.    What are the main tools used to influence macroeconomic policy

3.    What are the effects of deficits/surpluses on the U.S. economy?

4.    What is the significance of Revenues = Expenditures?

5.    What have been the responses of fiscal and monetary policy to the current pandemic in the United States and the USVI?

Define the following

Economic growth

·      -Full employment

·      -Stable prices

·      -Balance in the flow of funds into and out of the economy

·      -Fiscal policy

·      -Monetary policy

·      -President of the U.S

·      -Governor of the USVI

Chapter 4: Budget Cycle

1.    What are the four (4) phases of the budget cycle?

2.    What is the role of the executive and legislative branches of government in each phase of the budget cycle?

3.    Line-item veto power

Chapters 5 and 6: Budgeting for Revenues

1.    What are the major revenue sources used by federal, state, and local governments in the United States and the USVI?

2.    How do you determine whether a tax is progressive, proportional or regressive?

3.    What factors are considered before a tax is enacted by a legislative body?

4.    Discuss the revenue sources that are transaction-based? What do these revenue sources have in common?

Requirements: 3-4 Pages   

Student Name

Institutional Affiliation

 Economic policy of the federal, state, and local governments in the United States?

In the United States, there is the intervention of the government to control markets with economic policies. The federal government, state, and local governments employ policies that stipulate and cushion the economy. The policies employed by the federal, state, and local government include monetary policy and the fascial policy. Monetary policy involves controlling the money supply in circulation, while the fascial policy changes the government’s collection, raising, and spending money (Potrafke, 2017).

Main tools used to influence macroeconomic policy

The main function of the Federal Reserve or central bank is used to influence macroeconomic policy. The monetary policies involve managing of interest rate and influence of economic activity. The main tools that the government uses to implement monetary economic policy include open market operations, raised by the central bank, change in the discount rate, and change in the reserve requirement for the commercial banks. In contrast, that of fiscal policy includes taxation and government spending.

Effects of deficits/surpluses 

Both deficits and surpluses have an impact on the economy. The effect of surplus on an economy includes a reduction of government borrowing from both the public and private sources, lower interest since there are reduced debt levels, and reduced quality of public goods since a surplus demonstrates reduced government spending.  The effect of deficit include the crowding off effect, the higher interest rate, increased level of public debt, and short term experienced economic growth.

Significance of Revenues = Expenditures?

A revenue equals expenditure budget, also known as a balanced budget, assists the government in avoiding unplanned and excessive spending. Moreover, it allows the government to focus on other crucial areas for service delivery to the citizen. Despite that, a balanced budget enables the government to reduce the interest rate that accrues due to large loans.

The responses of fiscal and monetary policy to the current pandemic in the United States and the USVI?

During the current pandemic, the government employed some fiscal policy to cushion the economy. For instance, during the economic crises, the government used fiscal policy to stabilize the business cycle (Chugunov & Pasichnyi, 2018). The government response during the Covid pandemic included expansionary policy tax cuts on businesses to reduce the cost of living. On monetary policies, the united government responded with tools such as reduction of interest rate and liquidity provision such as grants to increase the money supply in the economy. Moreover, there was the purchase of assets to counter dysfunction in the money markets. The USIV waived fees on licenses and permits.

Definition of terms

Economic growth can be defined as the increase in a country’s production level of goods and services compared in a stimulated period such as one year. It is measured in terms of gross national product. Full employment can be defined as a situation where every individual willing to work at the prevailing wage rate is in a position to get a job. Price stability can be defined as a situation where no inflation or deflation is happening on the prices of goods and services (Menna & Tobal, 2021). Balance in the flow of funds in and out of the economy can be defined as the difference between all the country money inflows over a stipulated period and the outflow of the money out of the country over a specified period. Fiscal policy can be defined as government spending and taxation policy to impact economic conditions in a country, such as the aggregate demand and inflation. Monetary policies can be defined as tools that the government employs to manipulate the money supply in an economy; they include a change in interest rates, president of the US.is the individual on who the executive mandate of a nation is vested.

The governor of the USVI is the officer who holds the executive mandate in the United States Virgin Islands. The four phases of the budget cycle include budget preparation, budget submission approval, and execution.  In the budget preparation procedure, the legislature’s role consists of the pre-budget review and making of the main budget and orientation for the fiscal years. On the legislature, review the budget for approval by the executive.

While on budget approval, the legislature is charged with adopting the rules for the fiscal year. The legislature is also required to ensure that the budget is executed as planned.

The executive in budget preparation ensures that they prepare the budget and submit it to the legislature. In the budget approval, the executive is charged with signing the appropriation and the bills into law. In the execution, the executive is charged with the role to execute and implement the budget. Line-item veto power is a situation where the legislature has the power mandate, appropriate with the assistance of many governors, and hence veto bills and items contained in appropriations without vetting the entire bill. Significant sources of revenue for the local government include special levies and taxes, grants from the federal government, constitutional allocation, and income from various local government ventures, while the sources of revenue for the federal government include income tax, tax from cooperation, and federal tax. The source of income for the USVI includes economic ventures, licenses, and permits.

The difference between progressive and regressive tax is that a progressive tax takes increasing percentages of incomes from the taxpayer’s income, while the regressive tax is a tax that decreases in correspondent to an increase in the taxable income. Before the enactment of a tax, the factors considered include equity and fairness, simplicity, certainty, and transparency.  Transaction-based revenue is a transactional-based model revenue system-generated directly by selling a good or service to a consumer. The revenue sources that are transaction-based include pay-per-use, one-time purchases, and hybrid pricing.  The similarity in this type of revenue system is that the revenue is automatically generated once a product or a service has been sold.

References

Chugunov, I., & Pasichnyi, M. (2018). FISCAL POLICY FOR ECONOMIC DEVELOPMENT. SCIENTIFIC BULLETIN OF POLISSIA1(1(13), 54-61. https://doi.org/10.25140/2410-9576-2018-1-1(13)-54-61

Menna, L., & Tobal, M. (2021). Communication of Credit Rating Agencies and Financial Markets. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3891158

 Potrafke, N. (2017). Government ideology and economic policy-making in the United States—a survey. Public Choice174(1-2), 145-207. https://doi.org/10.1007/s11127-017-0491-3

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