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1 Introductory concepts 2  Market mechanism  3 Elasticities  4 Market structures 5  Market failures  6  Macro economic activity/eco growth  7 Inflation 8  Employment & unemployment  9  External Stability  10  Income distribution 11.Factors affecting economy  12  Fiscal/Budgetary policy  13  Monetary Policy   14 Aggregate Supply Policies  15 The Policy Mix

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Dealing with a budget surplus


Budget surpluses can either be invested financial markets (e.g. putting money into an account held with the RBA) or repay existing government debt.  The latter primarily occurred over the early to late 2000s and net government debt was eliminated, allowing the federal government to focus on investing the surplus in financial markets.  The government was able to invest in funds such as the Future Fund, Education Investment Fund (EIF), Building Australia Fund (BAF) and the Health and Hospitals Fund (HHF).  Billions of dollars were invested into a portfolio of investment assets (e.g. shares and bonds) that were to be used to pay for the government's future superannuation liabilities (Future Fund), to invest heavily in infrastructure such as transport and roads (BIF), and to provide for increased capital investment in educational institutions (EIF) and the health sector (HHF).  

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