December 13, 2019, 03:56:34 am

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#### vox nihili

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« Reply #750 on: July 16, 2019, 11:29:09 am »
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2. Explain why it can be argued that the underlying cash balance is considered a better indication of the budget position (4)
3. From the 2019 budget, outline an example of capital expenditure and current expenditure. (2)
5. With the use of data, explain how the budget outcomes can affect net government debt. (5)

You'd get a lot more from AN (and would more likely get help with your questions) if you tried to give them a shot first and let people correct that. We're here to help, not to do your homework for you
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#### Loren_T

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« Reply #751 on: July 24, 2019, 06:01:54 pm »
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Hi
I was wondering if the 2019-2020 budget is expansionary or contractionary?
The fiscal policy is to achieve budget surpluses, on average, over the business cycle but the budget also has tax cuts and increased government spending
I think the budget is mainly expansionary as it encourages economic growth and a boom, then after the business cycle, the budget will become contractionary...
Is this right?

#### emilyygeorgexx

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« Reply #752 on: July 24, 2019, 06:32:42 pm »
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Hi
I was wondering if the 2019-2020 budget is expansionary or contractionary?
The fiscal policy is to achieve budget surpluses, on average, over the business cycle but the budget also has tax cuts and increased government spending
I think the budget is mainly expansionary as it encourages economic growth and a boom, then after the business cycle, the budget will become contractionary...
Is this right?

To assess whether the budget currently holds an expansionary or contractionary stance you will have to look at the budget outcome from 2019-20 and compare it to 2018-19. You then need to see whether the budget surplus or deficit increased or decreased. That will then tell you whether it is expansionary or contractionary. You cannot determine whether it is expansionary or contractionary on mere factors such as economic growth.
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#### NomotivationF

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« Reply #753 on: July 24, 2019, 07:05:30 pm »
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Hi
I was wondering if the 2019-2020 budget is expansionary or contractionary?
The fiscal policy is to achieve budget surpluses, on average, over the business cycle but the budget also has tax cuts and increased government spending
I think the budget is mainly expansionary as it encourages economic growth and a boom, then after the business cycle, the budget will become contractionary...
Is this right?

Hey Jessica, becuase the 2019/2020 is a surplus, it means that it is a mildly contractionary budget due to the fact there are more leakages compared to injections into the economy. You're right in saying that the budget has tax cuts and infrastructure spending, however, due to it still being a surplus budget we need to address it as being contractionary. However, the interesting part is, that the stance of the monetary policy is expansionary, which opposes the government's contractionary stance on the budget. I think it's best to ask your teacher about this question, but purely for our current study design, a budget that is in deficit is an expansionary budget, and a budget that is in surplus is a contractionary budget.
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#### Loren_T

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« Reply #754 on: July 24, 2019, 08:35:47 pm »
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Thanks very much to you both

#### Jmac02

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« Reply #755 on: August 24, 2019, 09:34:12 am »
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Hello everyone,
I'm quite confused about the concept of job vacancies, and what they indicate (in terms of economic conditions)? (ie. fewer job vacancies = ... and more job vacancies = ...)

Thanks.

#### Seamus Wong

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« Reply #756 on: August 24, 2019, 12:07:03 pm »
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Hello everyone,
I'm quite confused about the concept of job vacancies, and what they indicate (in terms of economic conditions)? (ie. fewer job vacancies = ... and more job vacancies = ...)

Thanks.

More Job vacancies means that we are operating within our productive capacity and we have room to grow production levels. In relation to outcome 2: Aggregate Supply, higher job vacancies could be indicative of firms having expanded their operations (due to, for example, higher technical efficiency and thus an increased ability to produce more) and therefore having created new jobs in the process. These new jobs are 'vacant' positions that firms wish to have filled. Indeed, all things being equal, we should see an inverse relationship between employment growth and job vacancies.
i would then assume that lower job vacancies may reflect Australia operating at it's productive limit.
This would be an interesting case since Australia would be forced to expand its aggregate supply due to increased risk of demand-inflationary pressures. Here, however, the government would be limited in their options since most Aggregate-supply side policies have long implementation lag. This is generally why it's so important to be constantly improving AS and overall productivity.

This explanation may be entirely incorrect though cos I haven't done any reading about job vacancies.

If I have said anything wrong, please let me know.
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#### Jmac02

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« Reply #757 on: August 24, 2019, 01:46:19 pm »
+1
Thanks very much, I definitely see the logic in what you're saying.

#### Jmac02

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« Reply #758 on: August 24, 2019, 06:34:37 pm »
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Hi again,
Can a budget deficit occur when the gov't has a contractionary stance?

Thanks.

#### Jmac02

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« Reply #759 on: August 24, 2019, 10:39:41 pm »
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Loren_T All good! Thanks, fo the help.

#### Seamus Wong

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« Reply #760 on: August 25, 2019, 10:04:37 am »
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Hi again,
Can a budget deficit occur when the gov't has a contractionary stance?

Thanks.

A budget deficit can indeed occur when the government has a contractionary stance.
The budget deficit just has to be lower relative to the deficit the year prior (given that there is a deficit from the year prior)

For example, Let's create this hypothetical scenario:

2017:
Government runs an expansionary budget
Total Budget Receipts = 21
Total budget outlays = 441
= Budget Deficit of $420 2018 Government runs a contractionary budget by reducing total outlays and Increasing total receipts Total Budget Receipts = 73 Total Budget Outlays = 138 = Budget deficit of$69

You see, although 2018's budget was in the red, the deficit was smaller than 2017 (69<420).

However, IF you are only given one year's figure IN ISOLATION, you would just assume that it would be contractionary or expansionary based off of whether it's a deficit or surplus.
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#### Seamus Wong

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« Reply #761 on: August 28, 2019, 12:16:57 am »
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Hello everyone,
I'm quite confused about the concept of job vacancies, and what they indicate (in terms of economic conditions)? (ie. fewer job vacancies = ... and more job vacancies = ...)

Thanks.

I just re-evaluated my reply to this question and I think an important thing to realise is that Job vacancies are also dependent on Aggregate demand. For example, if firms are expanding their operations due to a rise in aggregate demand, job vacancies will rise as businesses seek greater quantity of labour resources to help keep up with rising levels of sales and production.

The fact that some Aggregate-supply-side policies rely partly on Aggregate-Demand represents one of the flaws with some AS-side policy measures. For example, take welfare reform. By encouraging Australians to enter the labour force, there needs to actually be jobs available. If jobs are not available but more people are entering the labour force, the unemployment rate will rise, and more individuals would meet the work test (i.e. the test that shows that welfare recipients are searching for work), meaning that strain is placed on budget finances as more welfare payments to the unemployed are made. This can lead to the government taking on even more debt to finance the now higher level of budget spending, which can obviously bring about a host of other issues.

So yeah, I would more link Job Vacancies to Aggregate demand than aggregate supply, since they reflect short-term fluctuations in the demand for labour.

« Last Edit: August 28, 2019, 12:18:47 am by Seamus Wong »
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#### Jmac02

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« Reply #762 on: September 08, 2019, 09:37:34 am »
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Hey everyone, how many budget initiatives should we remember for each area of AS policy (ie. 1 for spending on infrastructure, 1 for R&D, etc.) and can you have the same initiative for two areas of AS Policy? Thanks.

#### NomotivationF

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« Reply #763 on: September 08, 2019, 10:56:49 am »
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Hey everyone, how many budget initiatives should we remember for each area of AS policy (ie. 1 for spending on infrastructure, 1 for R&D, etc.) and can you have the same initiative for two areas of AS Policy? Thanks.

Hey Jmac, I would suggest knowing atleast 1 initiative for each area of AS policy. In recent exams VCAA has been asking questions about specific policies, instead of letting you pick one. Here's some of the initiatives I remember for each policy;

Immigration - 108,682 skilled migrants that pass a 'points test,' based on their ability to contribute to the Australian economy are let into the country. This policy mostly targets rural areas of Australia that are in shortage of skilled workers. (increase availability of resources).

Tax - You can use the accelerated depreciation allowance where assets under $30,000 can be written off as a tax liability for businesses, or (this is the one I use) you can use the elimination of the 37% and the 32.5% tax bracket and the creation and expansion of a 30% tax bracket for income earners of$37,000 - $200,000. This tax bracket change aims to eliminate the effect of 'bracket creep,' and encourages workers to take on more responsibilities (increase efficiency). Welfare - Jobs for family package, government is investing$30 billion into the quality and quantity of childcare, as well as offering mothers up to an 80% subsidy (on a sliding scale) for putting their children in childcare. This incentives mothers to re-enter the workforce as they .... (increases availability of resources).

Budgetary initiatives

Infrastructure - Government has pledged to invest $100 billion in infrastructure over the next 10 years, initiatives including but not limited to the construction of$2 billion Melbourne - Geelong rail and the $5 billion Melbourne - Melbourne airport rail link. This increases mobilisation of resources .... (increases efficiency) Training and Education - Youth jobs PaTH program. Young individuals at risk of long term welfare dependence are Prepared (trained), Trailed (interned) and Hired (mostly through wage subsidies provided to firms). (Increased availability of resources). Research and Development - Businesses engaging in R+D are allowed to inflate their expenses on R+D by 143.5% in order to reduce the amount of company tax they pay on their profits. Incentives R+D, if successful ...... (increases efficiency). Subsidies - (Not too sure about this one I don't usually use it, recheck with your teacher.) Export development grants are provided to firms engaging in overseas expansion/advertising, providing these businesses with up to a 50% subsidy on their costs for overseas expansion, provided they spend atleast$15,000. This allows ....... (reducing costs of production).
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