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Use this resource to complete the questions on the Budgetary policy – Data analysis worksheet. Figure 1: Aggregate demand–supply diagram showing cyclical instability in economic activity Image: Aggregate demand and aggregate supply (AD/AS) diagram showing how budgetary policy stances can be used regulate aggregate demand and promote domestic economic stability. The vertical axis shows the general price level and the horizontal axis shows real…

Refer to the Budgetary policy – Data sheet to answer the following questions. Refer to figure 1 to explain how the budget stance can be used to reduce cyclical instability in economic activity (vis-à-vis spending (AD), economic activity (GDP) and inflation (P)). Predict the impact of each stance on the budget outcome. Using the statistics in table 1, construct a bar graph showing the budget outcomes for the 10-year period between 2007…

What if the current 'tax landscape' were to change? What would happen to the government’s macroeconomic goals, our standard of living and equity in the distribution of income? Part 1: Impact on government revenue Open the interactive Tax models. Try each tax reform to see how it affects tax revenue. Complete the following table as you do Tax reform % deficit (-) in government Budget or % of surplus (+) in government Budget A…

Australia has 3 levels of government. The 3 levels are: Australian (or federal or national) state/territory local councils (also called shires or municipalities). All 3 levels of government work together to provide Australians with the goods and services they need. Each of the 3 levels of government has responsibility for providing some of these goods and services. Governments pay for these from taxation revenue. Everyone benefits from…

Aggregate supply policies are used by governments to encourage individuals and firms to contribute to increasing national output, especially through improving productive capacity. Improving productive capacity or greater efficiency helps to improve macro-economic performance and living standards. An example is provided in the case of tax reform. Through tax reform, governments seek to: incentivise businesses to invest and produce encourage…

Download the most recent federal Budget at budget.gov.au. Identify 3 key initiatives outlined in the Budget. For each of these initiatives, explain and analyse its likely impact on the economic goals of strong and sustainable growth, full employment and low inflation. Attach AD-AS models to justify your predictions. A supply-side initiative from the 2017–18 Budget has been provided as an example.  Table 1: Example of predicted impact…

How to explain budgetary policy stances and their effect on aggregate demand When economic growth is weak, there are high levels of cyclical unemployment. In this circumstance, an expansionary budget stance is needed to boost AD (shift spending from AD0 to AD1) and economic activity (shift production from GDP0 to GDP1). In this example, the economy shifted towards economic stability (moves to AD1, GDP1 and P1) where there is low inflation,…

Refer to Tax reform as an aggregate supply policy – Explainer to support you in framing your inquiry. Gather and evaluate data relevant to supply-side policy. This data could include primary sources (statistics, surveys) or secondary sources (texts, newspaper articles, internet sources including websites, YouTube). Outline details of the tax reform you have been allocated (what, how, why, when). Explain the impact of the tax on: aggregate…