Budget Surpluses (Revenues Exceed Expenses): Government's Role in Managing the Economy

Government's Role in Managing the Economy

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A budget surplus occurs when the government collects more tax revenue than it spends. Given current economic trends, it is unlikely that a surplus will be achieved in the near future. After you read, complete the exercise to reinforce your understanding.

In every country, the government takes steps to help the economy achieve the goals of growth, full employment, and price stability. In the United States, the government influences economic activity through two approaches: monetary policy and fiscal policy. Through monetary policy, the government exerts its power to regulate the money supply and level of interest rates. Through fiscal policy, it uses its power to tax and to spend.

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