Fiscal policy

The government can also use its own spending and taxing activities to achieve specific objectives. This is called fiscal policy. By increasing or decreasing its spending and taxing programs, the federal government may reduce or increase demand for goods and services. If the government reduces its own spending, it buys less from businesses, reducing sales and earnings, and people have less money to spend. Similarly, if the government raises taxes, people have less money to spend. Moreover, spending and taxing policies work together to increase or decrease aggregate demand. For example, if the government taxes to a greater extent than it spends, it causes a net reduction in the flow of income to people and businesses. Because this reduces aggregate demand for goods and services, it is a method for fighting inflation.

Fiscal policy uses budget deficits or surpluses to promote economic stability and growth. In the United States, some fiscal policy tools work automatically – without action being taken by the president or Congress. The progressive income tax, for example, is generally considered to promote stability automatically. It tends to reduce the government’s collection of revenue when personal and business incomes are declining, and thus helps offset the cutbacks in spending that accompany declining incomes. During business expansions, however, federal tax collection tends to rise fairly quickly and thus reduce inflationary pressures. During postwar business declines, Congress has sometimes legislated emergency spending measures, such as temporary increases in public works expenditures, as additional means of offsetting cutbacks in private spending and preventing unemployment.

Yet there are also problems associated with the use of fiscal policy. Many object to a reduction in government spending because this could mean a reduction in funds used to help provide education, health care and other services. Higher taxes are unpopular with both individuals and businesses. In addition, the use of fiscal policy to cause a sharp reduction in demand is somewhat controversial because it tends not only to reduce inflation but also to increase unemployment.

Vocabulary

A

1. to attempt – пытаться, пробовать

2. monetary policy – денежно-кредитная политика

3. fiscal policy – финансово-бюджетная политика

4. to promote – содействовать, помогать, достигать

5. the velocity of money circulation – скорость денежного обращения

6. a medium of exchange – средство обмена

7. a unit of account – единица расчета

8. currency –денежное обращение, деньги, валюта

9. Treasury – Государственное казначейство

10. Federal Reserve System – Федеральный резервный банк

11. a government fiat – правительственный декрет, указ

12. a valuable metal – ценный метал

13. to redeem the currency for smth – изымать деньги из обращения, обменивать на новые

14. fiat money – неразменные бумажные деньги

15. to have no intrinsic value – не иметь существенной стоимости

16. to make the currency legal tender – сделать деньги законным платежным средством

17. a checking account – вклад на текущем счете

18. an interest-bearing account – счет с начислением процентов

19. a savings account – сберегательный счет

20. to be converted – превратиться, трансформироваться

21. to require advance notice of withdrawals from the account – требовать предварительного уведомления о снятии денег со счета

22. to keep pace with smth – идти наравне, не отставать

B

1. to manage the country’s supply of money and credit – управлять денежной массой и объемом кредитных ресурсов в стране

2. a branch – филиал, отделение банка

3. Membership is optional for state-chartered banks – Членство не обязательно для банков, зарегистрированных штатом

4. to appoint – назначать

5. to rely on Congress for funding – полагаться на Конгресс в вопросах финансирования

6. fee – взнос, плата

7. to give the Fed the authority to vary reserve requirements – давать право Федеральному резервному банку варьировать резервные требования

8. a financial disaster seemed likely – в ситуации, когда финансовая катастрофа вероятна

9. tools for maintaining control over the total money supply and credit in the economy – инструменты для поддержания контроля за кредитно-денежной массой в экономике

10. the discount rate – ставка дисконта (внутренняя форма рентабельности) либо альтернативная стоимость капитала

11. to alter the amount of revenue – изменять количество налоговых сборов

12. to set aside – откладывать

13. deposit-taking institutions – учреждения, принимающие вклады

14. open market operations – операции на открытом рынке (с неограниченным числом участников)

15. spending and taxing activities – деятельность по налоговым сборам и государственным расходам

16. aggregate demand – совокупный спрос

17. a net reduction in the flow of income – сокращение суммы чистого дохода

18. a budget deficit/surplus – дефицит/профицит бюджета

19. progressive income tax – прогрессивный подоходный налог

20. revenue – (государственный) доход (от налогов и сборов)

21. to help offset the cutbacks in spending that accompany declining incomes – помогать компенсировать сокращения расходной статьи бюджета, которые происходят наряду с понижением дохода

22. temporary increases in public works expenditures –временный рост затрат на общественные работы

23. to object to smth/doing smth – возражать против, выступать против.