revenue expenditures

Examples of revenue expenditures in the following topics:

• Arguments For and Against Fighting Recession with Expansionary Fiscal Policy

  • Fiscal policy is a broad term, describing the policies enacted around government revenue and expenditure in order to influence the economy.
  • Governments can increase their revenue by increasing taxes, or increase their expenditure by spending money on programs.
  • Remember that government revenue is based on collected taxes.
  • When taxes equal government expenditures, the government has a balanced budget.
  • When the government spends more than the revenue it collects, it has a deficit.

• Fiscal Policy and Policy Making

  • Fiscal policy is the use of government revenue collection (taxation) and expenditure (spending) to influence the economy.
  • In economics and political science, fiscal policy is the use of government budget or revenue collection (taxation) and expenditure (spending) to influence economic.
  • The two main instruments of fiscal policy are government taxation and expenditure.
  • Therefore, for purposes of the above definitions, "government spending" and "tax revenue" are normally replaced by "cyclically adjusted government spending" and "cyclically adjusted tax revenue".
  • This expenditure can be funded in a number of different ways:

• Financing the US Government

  • The importance of taxation arises from the fact that it is by far the most significant source of government revenue and is therefore the primary means of financing government expenditures .
  • For example, income taxes due to their progressive nature are used to equitably derive revenue by differentiating tax rates by income strata.
  • It is important to note that when the government spends more than the tax revenue it collects, the government is operating at a deficit and will have to borrow funds to finance operations until taxes can be increased to return the government spending to a balanced budget.
  • In the United States the Internal Revenue Service is the regulatory authority empowered by Congress to collect taxes.

• Fiscal Policy

  • Fiscal policy is the use of government revenue collection or taxation, and expenditure (spending) to influence the economy.
  • In economics and political science, fiscal policy is the use of government revenue collection or taxation, and expenditure (spending) to influence the economy.
  • Government spending is fully funded by tax revenue and overall the budget outcome has a neutral effect on the level of economic activity.
  • Expansionary fiscal policy involves government spending exceeding tax revenue, and is usually undertaken during recessions.
  • This expenditure can be funded in a number of different ways: taxation, printing money, borrowing money from the population or from abroad, consumption of fiscal reserves, or sale of fixed assets (land).

• The Circular Flow and GDP

  • This portion of the circular flow contributes to expenditures on consumption, C and generates income, which is the basis for savings (equal to investment) and government spending (tax revenue generated from income).
  • I represents an expenditure on investment capital.
  • Government spending, G, is based on the tax revenue, T.
  • G can be equal to taxes, less than or more than the tax revenue and represents government expenditure in the economy.
  • The continuous flow of production, income and expenditure is known as circular flow of income.

• Deficit Spending, the Public Debt, and Policy Making

  • One of the largest budget expenditures for state governments is Medicaid.
  • Political realities make it unlikely that more than $150 billion per year in individual tax expenditures could be eliminated.
  • One area with more common ground is corporate tax rates, where both parties have generally agreed that lower rates and fewer tax expenditures would align the U.S. more directly with foreign competitioIn addition to policies regarding revenue and spending, policies that encourage economic growth are the third major way to reduce deficits.
  • Economic growth offers the "win-win" scenario of higher employment, which increases tax revenue while reducing safety net expenditures for such things as unemployment compensation and food stamps.
  • Other deficit proposals related to spending or revenue tend to take money or benefits from one constituency and give it to others, a "win-lose" scenario.

• Profit Optimization

  • Firms utilize strategies such as price and promotional reduction to minimize cost, maximize revenue, and thereby optimize profits.
  • Since total demand normally exceeds what the particular firm can produce in that period, the models attempt to optimize the firm's outputs to maximize revenue.
  • " Optimization can help the firm adjust prices and allocate capacity among market segments to maximize expected revenues.
  • Revenue optimization is a method of determining 'optimal' profits or expenditures, and can be related to quadratics, as the vertex of a parabola can illustrate the point where the ‘maximum' revenue can be attained.
  • This method is effective for maximizing profits for companies and families, as it can ensure the highest profit for sales and the lowest amounts for expenditures.

• Expense Recognition

  • An important issue in accounting is when to recognize expenditures.
  • When a business recognizes an expenditure, it records the amount in its financial records.
  • The expenditure offsets the income the business earned and is used to calculate the business's profit.
  • This makes the timing of expenses and revenues very important.
  • If the business uses cash basis accounting, an expenditure is recognized when the business pays for a good or service.

• Operating Expenses, Non-Operating Expenses, and Net Income

  • Operating expenses and non operating expenses are deducted from revenue to yield net income.
  • Its counterpart, a capital expenditure, or non operating expense, is the cost of developing or providing non-consumable parts for the product or system.
  • For example, the purchase of a photocopier is a capital expenditure.
  • The income statement is used to assess profitability by deducting expenses from revenue.

• Defining Aggregate Expenditure: Components and Comparison to GDP

  • Aggregate expenditure is the current value of all the finished goods and services in the economy.
  • The equation for aggregate expenditure is: AE = C + I + G + NX.
  • Government expenditure can include infrastructure or transfers which increase the total expenditure in the economy.
  • The GDP is calculated using the Aggregate Expenditures Model .
  • This graph shows the aggregate expenditure model.