Composed of national and local agencies of the government that directly control the economy.

Goods and services provided by the government.

Goods and services provided by individuals for personal use.

Concerned with government expenditure and taxes that influence the economic activity of the country.

Deals with the income and expenditures of the government.

Causes economy to run rapidly by increasing its spending, cutting taxes; and the end result of which is increasing aggregate demand.

• Restrictive fiscal policy

• Expansionary fiscal policy

Causes economy to run more slowly because of the reduction in government spending and raise in taxes, which results in the reduction of aggregate demand.

• Restrictive fiscal policy

• Expansionary fiscal policy

Function of the Government

• To establish a stable economy

• Give money to people

• To provide for public goods

• To provide social service

Is a document dealing the projected revenues and planned spending of the national government for a financial year. The budget details the size and allocation of expenditures as well as how these expenditures will be funded.

Government spends more than its revenue