Budgetary/fiscal policy  Goals of budgetary policy   Budget outcomes   Cash v underlying outcome   Fiscal outcome   Composition of revenue   Composition of expenditure   Financing a deficit   Dealing with a surplus   Actual v estimated outcome  Auto v discretionary stabilisers   Expansionary v contractionary  Rationale for budget surplus   Fiscal drag/bracket creep   BP and economic goals   Fiscal strategy   Eco growth  Inflation Employment  Ext stability  Income dist  Living stds  BP strengths + weaknesses  Economicstutor..com.au

Copyright © All rights reserved. Site administered by CPAP and content provided by Romeo Salla    

Email: admin@economicstutor.com.au     romeosalla@economicstutor.com.au

 Course notes quick navigation

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

Next page

rationale for delivering a budget surplus

Fiscal consolidation is a term commonly used to describe a government consolidating its finances by reducing expenditure and raising revenue in order to reduce the deficit or return the budget to surplus.  The potential for a budget surplus to have expansionary effects was briefly discussed above in relation to the downward pressure a surplus places on interest rates and the stimulus (crowding in) this gives to Investment, Net exports and AD over the longer term.  The economic rationale for fiscal consolidation and/or budget surpluses include the following points.

Test yourselfPrevious page