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Principles of Economics Assignment -

Case Study - MYEFO: Budget deficit increases to $37b as Government releases economic update

Answer the following questions: In your response, you should discuss the following questions in an essay format.

Question 1: What is fiscal policy? Comment on the role of fiscal policy in a modern economy. Illustrate and explain how fiscal policy may be used to remove a deflationary gap.

Question 2: The long-term trajectory of returning to surplus is being pushed back by another year, until 2020-21.What is the current stance of fiscal policy in Australia? Apply your understanding of fiscal policy to the real life economic example and explain how the government will return the bud get from a deficit to a surplus by 2020-21. How does Australia's budget deficit compare with the budget balances of OECD economies? Use secondary sources including graphs and tables to explain.

Question 3: According to the MYEFO statement, what factors have contributed to the deterioration of the budget deficit? Comment on the spending changes outlined by the government to offset increasing spending and to reduce the deficit. What are the likely consequences of government spending cuts?

Question 4: Read the latest economic outlook (ex. 2016-17 MYEFO), comment on the most recent state of macroeconomic indicators such as inflation, unemployment and government spending cuts for 2017. What factors might have lessened or worsened the severity of deficit for 2017 since the release of 2015-16 MYEFO statement?

Question 5: Discuss the strengths and weaknesses of using fiscal policy to stabilise the economy.

Attachment:- Principles of Economics Assignment - Case Study.rar