Last Minute

Question 0

What does a balanced budget mean?

Answer 0

Where G=T

Government spending equals revenue

Question 1

Define fiscal policy

Answer 1

Refers to the federal governments use of its annual budget TO AFFECT the level of economic activity, resource allocation and income distribution.

Question 2

What is the budget surplus?

Answer 2

G<T

Government spending is less than revenue

Question 3

What is the budget deficit?

Answer 3

G>T
Government spending greater than revenue

Better during the trough phase

Question 4

Explain the monetary expansionary policy

Answer 4

ECONOMY IN A RECESSION
RBA will adopt an expansionary policy by reducing the cash rate so as to stimulate economy and spending (AD curve shift to the RIGHT)
This will increase in real GDP and employment but not as much as the rise in output due to excess capacity in the economy.