CHAPTER 11 Fiscal Policy and Automatic Stabilizers: What Managers Need to Know Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 11-1 Categories of U.S Government Taxation, 2006 Source: U.S Economic Report of the President, 2006, http://www.gpoaccess.gov/eop/2006/2006_erp.pdf, p 377 (accessed September 17, 2006) Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 11-2 Categories of U.S Government Spending, 2006 Source: U.S Economic Report of the President, 2005, http://www.gpoaccess.gov/eop/2006/2006_erp.pdf, p 377 (accessed September 17, 2006) Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 11-3 Types and Maturities of Government Securities Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 11-4 Owners of U.S Government Debt, 1981–2006 Source: Federal Reserve Bank of St Louis, Economic Data—FRED II, http://research.stlouisfed.org/fred2/ (accessed September 17, 2006) Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 11-5 Effects of Government Borrowing in the Real Loanable Funds Market Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit M11-1 Crowding Out with Perfectly Elastic, Perfectly Inelastic, and an Upward-Sloping Supply of Real Loanable Funds Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 11-6 Effects of Increased Government Borrowing in the Real Goods Market Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit M11-2 Effects of Government Borrowing in the Real Loanable Funds Market Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 11-7 Budget Surpluses Increase the Supply of Real Loanable Funds Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit M11-5 Neutral Fiscal Policy: Active Deficit = Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 11-11 Expansionary Fiscal Policy: Active Deficit = $30 Billion Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 11-12 Contractionary Fiscal Policy: Active Surplus Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 11-13 Lags in Fiscal Policy Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 11-14 Total U.S Public Debt, 1966–2006 Source: Federal Reserve Bank of St Louis, Economic Data—FRED, http://research.stlouisfed.org/fred2/ (accessed September 17, 2006) Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 11-15 U.S Real Per Capita Government Debt, 1966–2006 Source: Federal Reserve Bank of St Louis, Economic Data—FRED, http://research.stlouisfed.org/fred2/ (accessed September 17, 2006) Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 11-16 Changes in a Government’s Balance Sheet  Assets   Liabilities +  Stockholders’ Equity Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 11-17 U.S Government Debt-to-GDP Ratio, 1966–2006 Source: Federal Reserve Bank of St Louis, Economic Data—FRED, http://research.stlouisfed.org/fred2/ (accessed September 17, 2006) Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 11-18 International Comparison: Government Debt-to-GDP Ratios of Developed Nations for 2006 Source: OECD, Annex Table 32, ‘‘General Government Gross Liabilities: Percent of Nominal GDP,’’ http:// www.oecd.org/dataoecd/5/51/2483816.xls (accessed September 17, 2006) Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 11-19 A Nation’s Monetary Base Changes When Our Imaginary Horizontal Line Is Crossed Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 11-20 Government Taxes Have No Effect on the Monetary Base Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 11-21 Monetary Effects of Government Transfers to the Central Bank Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 11-22 Government Deposits at Central Banks as a Percentage of Total Central Bank Liabilities: 2002 Source: Richard W.Kopcke, ‘‘The Practice of Banking in Other Industrialized Countries,’’ New England Economic Review, Second Quarter 2002, p Also available at http://www.bos.frb.org/economic/neer/ neer2002/neer202a.pdf (accessed September 17, 2006) Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 11-23 Monetary Effects of Government Spending Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 11-24 Effects of Government Borrowing on a Nation’s Potential Money Supply Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved ... South-Western, a part of Cengage Learning All rights reserved Exhibit 11- 6 Effects of Increased Government Borrowing in the Real Goods Market Copyright© 2008 South-Western, a part of Cengage Learning All... 11- 19 A Nation’s Monetary Base Changes When Our Imaginary Horizontal Line Is Crossed Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 11- 20 Government Taxes... South-Western, a part of Cengage Learning All rights reserved Exhibit 11- 22 Government Deposits at Central Banks as a Percentage of Total Central Bank Liabilities: 2002 Source: Richard W.Kopcke, ‘‘The Practice