Budget initiatives in past 2 years and their effect on macroeconomic goals

Question 1

JobKeeper

Answer 1

Introduced in the 2020-2021 budget and continued into the following financial year

A wage subsidy and aimed to keep employment afloat during the covid-19 pandemic by providing $750 a week to eligible employees.

Helped keep aggregate demand afloat as providing people with some disposable income, which would help keep private consumption expenditure afloat.

Increased material and non-material living standards.

Question 2

Further personal income taxes

Answer 2

The 2021-2022 federal budget introduced tax cuts worth around $7.8 billion to low- and middle-income earners.

This will increase disposable income, which should increase private consumption expenditure and aggregate demand as a whole.

This increased economic activity, material living standards and non-material living standards.

Question 3

Health spending

Answer 3

The 2021-2022 federal budget introduced a further $1.9 billion to the COVID-19 vaccination roll out and $2.3 billion for expanded mental health care and suicide prevention.

This directly benefitted non-material living standards as it aims to increase wellbeing in areas such as health and happiness.

improve economic activity as private investment expenditure may rise with the investment in the industry.

Will positively affect employment, as vaccines make it safer for people to return to the work force as well as adequate mental health treatment.

Question 4

Goal of strong and sustainable economic growth

Answer 4

Domestic macroeconomic goal to achieve the highest economic growth rate possible, consistent with strong employment growth, but without running into unacceptable inflationary, external, or environmental pressures. Often around 3-3.5% GDP growth pa.

Question 5

Goal of full employment:

Answer 5

the attainment of the lowest unemployment rate possible before inflation begins to accelerate. This is known as the Non Accelerating Inflation Rate of Unemployment (NAIRU) and is typically about 5%.

Question 6

Goal of price stability

Answer 6

price stability or low inflation is a situation where prices rise 2-3% CPI (consumer price index) on average over time.