Florida State University Deci

PROBLEM I (25 POINTS)

While many pandemic pressures are easing, broader sources of higher inflation are replacing them. Used car prices show signs of picking up again, cost for raw goods like cotton and crude oil are increasing, and companies continue to experience pain from persistent supply chain disruptions. A longer burst of inflation raises the chances that consumers will change their expectations and behavior, paving the way for more permanent price increases.

The Federal Reserve Board has relaxed monetary policy for the 2020 and 2021, because of the COVID-19 pandemic. This Board is now preparing to withdraw some of its support for the economy soon, but it would prefer to do so only gradually, given the millions of Americans who remain out of work.

REQUIRED:

  • What are the major reasons for the relaxation of monetary policy by the Federal Reserve Board during the pandemic? Explain your response in detail.
  • Is inflation progressive, proportional or regressive? Explain your response in detail.
  • What is the goal of federal, state and local governments when the try to determine whether to raise or lower taxes and expenditures or incur debt?
  • What steps can be taken to ensure the compatibility of fiscal and monetary policy?

Lee Jr., Robert D.,Johnson, Ronald W.,Joyce, Philip G.. Public Budgeting Systems. Jones & Bartlett Learning. Kindle Edition.

PROBLEM 2. (25 POINTS)

The availability of revenues set the tone for deciding the level of expenditures and the decision process for allocating expenditures among competing priorities.

The major participants in the budget process want to consider the equity considerations and economic concerns in the determination of how much money is going to be raised by taxes before adopting them?

Required:

  • What are the other factors aside from the adequacy of revenue, does a government choose one particular revenue source over another?
  • What are the equity consideration and economic efficiency concerns in the determination of how much money is going to be raise by taxes?
  • How do you determine whether a tax is progressive, proportional or regressive? Give an example of each.

Lee Jr., Robert D.,Johnson, Ronald W.,Joyce, Philip G.. Public Budgeting Systems. Jones & Bartlett Learning. Kindle Edition.

PROBLEM 3. (25 POINTS)

  • What is your response to the observation that the budget cycle is a coordinating and decision-forcing mechanism?
  • In general, what phases of the budget cycle is the responsibility of the executive branch of government?
  • What phase of the budget cycle is controlled by the legislative branch of government?

Lee Jr., Robert D.,Johnson, Ronald W.,Joyce, Philip G.. Public Budgeting Systems. Jones & Bartlett Learning. Kindle Edition.

PROBLEM 4. (25 POINTS)

Identify at least four (4) revenue sources from voluntary transactions and discuss their applications, and the political and economic issues surrounding them.

Lee Jr., Robert D.,Johnson, Ronald W.,Joyce, Philip G.. Public Budgeting Systems. Jones & Bartlett Learning. Kindle Edition.

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