Public Finance Expenditures and Taxes

Topic 

Public Finance Expenditures and Taxes

Instructions 

Consider the following as you read:

• What are the major categories of Federal government spending and revenue and of state/local government spending and revenue?
• How can you use the circular flow diagram to illustrate how the allocation of resources is affected by the government’s revenue and expenditure decisions?

Answer Preview 

Statistics have revealed that the federal budget was approximately $3.8 trillion in the 2015 fiscal year. Notably, these trillions of dollars constitute approximately 21% of the United States economy. The treasury in the United States splits all the federal spending into three categories which include discretionary spending, mandatory spending, and interest on the debt. Apparently, discretionary and mandatory spending constitutes over 90% of the entire federal spending and reimburse for all the government programs and services which are used by Americans.

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