Economics Question..!! (1 Viewer)

[k150764]

Hi..In our preliminary course, we had to do a 08/09 budget essay and
i got like 1/5 and 2/5 for two of the essay questions which was similar

the questions were



1. Exaplain the impact of the 2008/09 Federal Budget on the level of economic activtity (the circular flow of the economic activtiy) and the buisness cycle in the next 12 months.


2. Exaplin the impact of the 2008/09 Federal Budget on the level of economic activtity (the circular flow of economic activtity) and the business cycle longer than the next 12 months.



what do i need to talk about in these questions??
and what do they mean by next 12 months and longer than the next 12 months??







our teacher didn't go over these questions because we were busy in
catching up with the work for our yearlies

If anyone can help..it will be great
i

 

[krazedrealitii]

Both questions are asking you the impact of the budget on economic activity in terms of the circular flow, meaning you have to discuss the components of the circular flow and how each sector is impacted:
households
firms
financial sector
government sector
imports/exports

The surplus theoretically should place constraints on economic activity consumption and spending and savings and whatnot but the government has implemented many macroeconomic reforms such as changes to taxation policy, increases in spending on infrastructure, etc. that counterbalance the constraints and actually increase the flow of funds in the economy. This means that there is a stimulatory effect on economic activity overall.

However, the difference between the 2 questions is the short term vs. long term, and basically i think that's macro policy (short term - but this is only including fiscal policy when in we are talking about the budget)) and micro policy (long term).

I guess you can say that budgeting decisions to increase spending in specific areas (i.e. microreform) will stimulate economic activity in the long run and should have a positive effect on economic activity and increase sustainable economic growth and promote upswings in the business cycle, whilst in the short run budgeting decisions are always counter-cyclical (if you refer to the diagram of the business cycle there is a countercyclical policy trend line) and over the next 12 months it is evident there will be a downswing in the business cycle. So discuss how recently the government has acted to counterbalance this by reducing the budget surplus (although I'm not sure if this would be accepted since the question refers specifically to the 2008/09 budget) and how this will stimulate economic activity in the Australian economy.

I can't be sure if this answers the questions correctly, but it would be my take on it. Sorry if its confusing!

 

[k150764]

Both questions are asking you the impact of the budget on economic activity in terms of the circular flow, meaning you have to discuss the components of the circular flow and how each sector is impacted:
households
firms
financial sector
government sector
imports/exports

The surplus theoretically should place constraints on economic activity consumption and spending and savings and whatnot but the government has implemented many macroeconomic reforms such as changes to taxation policy, increases in spending on infrastructure, etc. that counterbalance the constraints and actually increase the flow of funds in the economy. This means that there is a stimulatory effect on economic activity overall.

However, the difference between the 2 questions is the short term vs. long term, and basically i think that's macro policy (short term - but this is only including fiscal policy when in we are talking about the budget)) and micro policy (long term).

I guess you can say that budgeting decisions to increase spending in specific areas (i.e. microreform) will stimulate economic activity in the long run and should have a positive effect on economic activity and increase sustainable economic growth and promote upswings in the business cycle, whilst in the short run budgeting decisions are always counter-cyclical (if you refer to the diagram of the business cycle there is a countercyclical policy trend line) and over the next 12 months it is evident there will be a downswing in the business cycle. So discuss how recently the government has acted to counterbalance this by reducing the budget surplus (although I'm not sure if this would be accepted since the question refers specifically to the 2008/09 budget) and how this will stimulate economic activity in the Australian economy.

I can't be sure if this answers the questions correctly, but it would be my take on it. Sorry if its confusing!

Thanks ..it helped me alot