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Part 1: Budget forecasting errors over time Errors in Budget forecasting are often represented as a percentage of the total economic output of a country, or gross domestic product (GDP). This is a more realistic measure of the size of a Budget forecasting error as it is relative to the size of an economy. The errors in Budget forecasting represented as a percentage of GDP are shown in the table below. Errors for One-Year Forecasts, as a…

Part 1: Budget forecasting errors over time Errors in Budget forecasting are often represented as a percentage of the total economic output of a country, or gross domestic product (GDP). This is a more realistic measure of the size of a Budget forecasting error as it is relative to the size of an economy. The errors in Budget forecasting represented as a percentage of GDP are shown in the table below. Errors for One-Year Forecasts, as a…

Part 1: Calculating and interpreting absolute, relative and percentage errors Refer to the data table in The Budget and forecasting data sheet. If possible, use spreadsheets to assist you with the following calculations. For both the Government revenue and spending calculate the: Absolute error Relative error Percentage error For both the Government revenue and spending determine: If the estimate was an overestimate or an…

There are 3 main types of taxes in Australia: progressive, proportional and regressive.Progressive taxes: The higher the income, the higher the percentage of tax paid. Income tax for individuals in Australia is a progressive tax. Progressive income tax helps to alleviate poverty by taking a larger proportion (percentage) of income from the rich than from those on low incomes. The money raised in this way potentially becomes available to pay for…

‘Compound interest is the eighth wonder of the world. He who understands it, earns it... he who doesn't ... pays it.’ – Albert EinsteinCompound interestCompound interest is calculated on the principal amount that you borrowed or invested and on the accumulated interest of previous periods – It is regarded as ‘interest on interest’.Compound interest is a way to grow your savings (or debt) faster. Figure 1 shows the difference compound interest…

  Part 1: Calculating the balance of a super fund with repeated application of simple interest paid annually Set up a spreadsheet to complete the missing information in table 1. There are some assumptions that have been made: The individual is 10 years off retirement. Interest is credited annually (in reality, super funds credit interest more frequently, so the super balance will grow more). No fees have been included in the…

  Calculating the balance of a super fund with interest paid annually and monthly Set up 2 spreadsheets to complete the missing information in table 1 and table 2. Information for setting up your spreadsheet on compound interest Compounded annually Principal ($) Interest rate (%) (annually) Time (in years) New account balance Interest…

You have been asked to give business advice for the following 2 businesses to help them make decisions that will maximise their profit. In particular, each business wants to know: The best sale price to maximise profit. The number of units they should produce to maximise profit. Total sales in dollars when profit is maximised. The cost of producing this number of units The profit they will make. At what price/s they will make zero profit…