Fiscal policies are government policies regarding government spending and taxes, to monitor and influence the nation's economy (Investopedia, 2016). There are several policy options that a government could choose from, among them being changes in government purchases, business taxes, income taxes, and transfer payments. In this essay I will briefly showcase the current economic condition of Australia, and what policies I think the Australian government should put forward.
Looking at data provided by the Reserve Bank of Australia (RBA), Australia's economy is doing well. Economic growth is at 1.8%, inflation is manageable at 1.5%, the unemployment rate is relatively low at 5.8%, and household saving ratio is at 6.3%. According to the Organisation for Economic Co-operation and Development (OECD), economic growth will continue to grow and
…show more content…
However, a contractionary policy could be used sparingly to ensure that inflation doesn't increase further.
One way to implement a contractionary policy is by reducing government purchases. The goal of reducing aggregate demand in this way, is to slow down unsustainable production or lower asset prices. Shifting aggregate demand to the left, lowers the price level.
Another route that can be taken is through business taxes. The government could increase the tax rate of business, also as an attempt to slow down production. However, according to Investopedia, "In modern times, an increase in the tax level is rarely seen as a viable contractionary measure". Instead, according to that site, governments should focus on decreasing spending. Personally, I prefer raising taxes to cutting government spending, as often times government cuts have negative effects on economically vulnerable people. For instance, benefits (transfer payments), funding for education and environment are some of the programs that are often first to be
In this essay I will be discussing the features of Scotland’s mixed market economy, describing four aspects of the Scottish economy; Tourism, unemployment, growth and the NHS.
Shadowing World War II, there was an amplified fear of communism in Australia. The influence of the threat of Communism in Australian local politics from 1945 to the 1950’s was very strong as you can see through Robert Menzies, the Petrov Affair, The fear of Ussr spies, the royal commission and the Alp split show relevant threats to the Australian Domestic politics by saying they are spies, traitors and liars.
A balanced stance on fiscal policy was targeted by the Government in response to the global recession between short and long-term policies. These measures involved bonus payments to low and middle-income Australians to insta...
What is defined as a global citizen? They’re considered to be people or countries who understand their obligations at a global level. Over the past 50 years the countries of the world have become increasingly interconnected. With this, there has been an increasing awareness that only global cooperation can solve problems including poverty and epidemics, stop wars, and reverse environmental degradation and climate change. As the globe battles with these underlying problems, Australia’s partake, even the smallest amount, is fundamentally important, especially with its stance currently as being the 15th richest country in the world. However, in recent years Australia hasn’t demonstrated, in a few of these global issues, the true values and morals of being a good global citizen.
Government spending and deficits automatically increase during economic downturns due to more demand on social safety net provisions and falling tax revenue...
Add Changes in the Gross Domestic Product (GDP), Income/Wages, Consumer Price Index (Inflation), Currency Strength, Corporate Profits, and Balance of Trade to bullet point list.
Over the past five years the Australian economy has gone through many changes experiencing both the peaks and troughs associated with business cycle.
The idea of the globalisation of Australian businesses, the process where businesses develop themselves internationally is one of the main issues in our current society. The concept of globalisation has occurred due to many factors, such as reduced trade barriers, a reduction in tariffs and quotas, new developments in technology and also new innovations in transportation technology. These factors that have caused globalisation can result in many consequences, both positive and negative. These consequences are free trade caused by a reduction in tariffs and environmental costs such as pollution caused by factories and greenhouse gasses causing global warming.
Australia has had one of the most outstanding economies of the world in recent years - competitive, open and vibrant. The nation’s high economic performance stems from effective economic management and ongoing structural reform. Australia has a competitive and dynamic private sector and a skilled, flexible workforce. It also has a comprehensive economic policy framework in place. The economy is globally competitive and remains an attractive destination for investment. Australia has a sound, stable and modern institutional structure that provides certainty to businesses. For long time, Australia is a stable democratic country with strong growth, low inflation and low interest rate.(Ning)
The reduction of government role in the economy will affect fiscal policy by decreasing deficit spending a...
Everyone has their own political leaning and that leaning comes from one’s opinion about the Government. Peoples’ opinions are formed by what the parties say they will and will not do, the amounts they want spend and what they want to save. In macroeconomic terms, what the government spends is known as fiscal policy. Fiscal policy is the use of taxation and government spending for the purposes of stimulating or slowing down growth in an economy. Fiscal policy can be used for expansionary reasons, which is aimed at growing the economy and increasing employment, or contractionary which is intended to slow the growth of an economy. Expansionary fiscal policy features increased government spending and decreases in the tax rates as where contractionary policy focuses on lowering government spending and increasing tax rates. It must be understood that fiscal policy is meant to help the economy, although some negative results may arise.
In time of economic crisis the government has a choice to cut spending or increase spending for public goods and services. “In 2009, Congress passed the American Recovery and Rein- vestment Act, which authorized $787 billion in spending to promote job growth and bolster economic activity”(Stratmann/Okolski 3). John Maynard Keynes, an economist of 20th century, suggest that the government should run a deficit if it will create jobs and increase capital gain. This theory support the current stimulus package that has been introduce during President Obama’s term. Although the flaw with this concept is that it makes the assumption the government has done studies and understands which areas needs the funding the most and knows where it will be beneficial, realistically that is not true. “Federal spending is less likely to stimulate growth when it cannot accurately target the projects where it will be most productive” (Stratmann/Okolski 2). This can be seen because political figures will spend money where it directly supports their needs as well. For instance, the political figure would rather spend money to things that will yield a p...
In our opinion government spending is better than tax cuts. Government spending increases the employment as well as the income of the people of the country, though tax cut only increases the wealth of the people who may not spend the extra money earned and help in the growth of the economy.
In summation, based on these three but important economic variables one can expect slight improvements for the economy in different aspects. The best news appear to be an expected rise in projected consumer spending, while a steady unemployment rate is expected, and small but substantial growth in GDP seems to be around the corner thanks to an encouraging PMI that reports expansion at a lower rate.
The other method is Deflationary fiscal policy this involves decreasing AD therefore the government will cut their spending and or increase taxes. Higher taxes will reduce consumer spending. This will lead to an improvement in the government’s budget deficit.