An Example The US government collects $10M in taxes.
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An Example The US government collects $10M in taxes
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Transcript of An Example The US government collects $10M in taxes.
An ExampleThe US government collects
$10M in taxes
Public•Taxpayers
Government
Government’s checking account + $10M Public’s checking account - $10MNet change = 0
Tax Payments$10M
Assets = Liabilities + Net Worth
00
Bank’s Balance Sheet
Central Bank
An ExampleThe government borrows $10M
from the public
Public•Lenders•Savers
Government
Payment for Securities
Government Securities
0 0
Assets = Liabilities + Net Worth
Bank’s Balance Sheet
Central Bank
Government’s checking account + $10M Public’s checking account - $10MNet change = 0
An ExampleThe government spends the funds
Public•Highway Contractor
Government
Goods & ServicesPayment
0 0
Assets = Liabilities + Net Worth
Bank’s Balance Sheet
Central Bank
Government’s checking account - $10M Public’s checking account + $10MNet change = 0
Example: Central Bank Buys $10M in Treasury Bonds
Example: Central Bank Buys $10M in Treasury Bonds
Public
Public’s checking account +$10MNet change = $10M
GovernmentSecurities $10M
Assets = Liabilities + Net Worth
Reserves atFed + $10M
0
Bank’s Balance Sheet
Central Bank
Check$ 10M
