Budgetary policy

Economics Senior secondary 200

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Introduction

Students learn that budgetary policy relates to changes in the level and composition of the Australian Government’s revenue and expenditure for the financial year ahead. They explore how budgetary policy is used as a key aggregate demand management mechanism and how different stances can be used to counter business cyclic changes. Students also analyse federal Budget data and Australia’s performance at achieving domestic macroeconomic objectives over a 10-year period.

Topics:

  • Budgetary or fiscal policy, including budget outcomes
  • Domestic macroeconomic goals of sustainable economic growth, full employment and low inflation
  • Budgetary policy as an aggregate demand management mechanism
  • The intended macroeconomic impact of the budget outcome on the direction of AD (C + I + G + X – M)
  • Australia’s economic performance in relation to domestic macroeconomic economic goals
  • The effect of the most recent federal Budget on domestic macroeconomic goals

See also:

Teacher resources

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Visualiser

Modelling budgetary stances

 
Teacher notes

Modelling budgetary stances

Student learning resources

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Explainer

Budgetary policy

 
Data analysis worksheet

Budgetary policy

 
Data sheet

Budgetary policy

 
Investigation

Effects of budgetary policy

Suggested activity sequence

This sequence is intended as a framework to be modified and adapted by teachers to suit the needs of a class group. If you assign this activity to a class, your students will be assigned all student resources on their 'My learning' page. You can also hand-pick the resources students are assigned by selecting individual resources when you add a work item to a class in 'My classes'.

  1. Students read the explainer. Encourage students to take notes using the Cornell note taking system as they read.
  2. Use an AD-AS diagram on the visualiser to model how the government can use countercyclical budgetary policy to stabilise the economy and improve Australia’s economic prosperity. For an explanation of how a budgetary stance can be used to stabilise the economy see the teacher’s notes.
  3. Students complete the worksheet. They will need to refer to the data sheet.
  4. Use a discussion strategy, such as a concentric circles to guide student discussions on:
    • Australia’s economic performance between 2008 and 2017 in relation to:
      • unemployment rates
      • inflation rates
      • economic growth.
    • The benefits of returning to a budget surplus.
  5. Students complete the investigation.
  6. Brainstorm the list of initiatives students reported on and summarise student predictions on the board.

    Initiatives

    Strong and sustainable economic growth

    Full employment

    Low inflation

     

     

     

     
  7. Discuss if the most recent Budget will lead to the achievement of domestic macroeconomic goals and why.