For A Company To Be Impacted By The Federal Budget The Company Must Be An Instit

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Term Paper Title	For A Company To Be Impacted By The Federal Budget The Company Must Be An Instit
# of Words	1059
# of Pages (250 words per page double spaced)	4.24

For a company to be impacted by the Federal Budget the company must be an institution which relies on the financial stability of the entire economy.  In short all corporations will be affected one way or another by the federal budget.  What is the federal budget and how does it impact the financial administration of the firm?  The federal budget is the budget of the federal government.  Though the government does not have total control over tax revenues and certain expenditure as a participant in the economy, the government makes purchases of goods and services and collects taxes and makes payment to the households.  In order to collect taxes or purchase goods and services the federal government comes out with the budget.  This budget is then approved by the Congress and applied to better the economy.
     The federal government budget can affect the overall economy through the following:
Fiscal policy: - this refers to the government taxing and spending behavior.  How does this affect the financial administration of the firms? If the tax policy is changed and consumers tax rate increases or the percentage of tax that investors pay on their profit increases then the financial administration of that firm will be affected in helping consumers make future investment.
Discretionary Policy: - this policy refers to changes in taxes or spending that is the result of conscious changes in government policy.  Because of taxes and expenditure often go up and down in response to change in the economy this policy is used to stabilize the economy.  For example if the economy goes into recession, the number of unemployment which results in the increase of unemployment insurance (payment made by government).  The impact of this policy in the firm financial administration can be felt through the consumer will not have purchasing power.

Monetary Policy: - this policy refers to the behavior of the Federal Reserve regarding the nation money supply.  This happens by increasing or reducing reserve available to banks.  If the discount rate is high then the cost to borrow will be high in time like that banks will call in some of their loan to balance the reserved ratio.  The higher the discounted rate, the higher the cost of borrowing and the less borrowing bank will want to do.
     When we look at the overall impact that the Federal budget have towards financial administration we have no choice but to agree that its impact could be measured in several ways.  If we take inflation wh...

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