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Much of the federal government's spending is mandatory spending—required by existing law. The remainder of the budget is discretionary spending. Major categories of government spending include entitlements, such as Social Security and Medicare, defense, and interest on the national debt.

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How the Government uses spending and tax policy to maintain economy, foster economic growth.

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How the Government uses spending and tax policy to maintain economy, foster economic growth.

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The actions of government play a major role in the flow of economic activity. The Federal Reserve System uses monetary tools to regulate the nations money supply and moderate the effects of expansion and contraction in the economy. Taxes also help economic growth by getting money from the people.

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a tax deduction can encourage a purchase, such as the mortgage deduction
a sin tax can reduce consumption of socially undesirable products

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a tax on a good or service raises the cost and the price. People respond by buying less of the product

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Resource Allocation
Behavior adjustment
Productivity and growth