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Word Count: 703
A budget is an estimate of Commonwealth revenue and expenditure for the forthcoming fiscal year The Budget contains information on matters such as economic forecasts the provision of GS the Governments socialpolitical priorities and how the Government intends to attain these priorities The main objectives of the federal government are to gain full employment of people 15-over who are willing and able to work price stability - government attempting to maintain stable prices by controlling inflation rates external balance - low current account deficit economic growth - increasing real GDP per capita so living standards improve The role of a budget is to assist the government in achieving its economic objectives The 3 possible budget outcomes are a Budget Surplus this occurs when total level of economic activity is reduced by increasing taxes and lowering government spending A Fiscal Policy is the use of government taxes and spending to alter macroeconomic outcomes The contractionary fiscal policy GT would be used to reduce spending and inflation A Balanced Budget is the effect of the neutral stance of fiscal policy GT where government spending is fully funded by tax revenue Tax payers may spendsave less A Budget Deficit increases output and level of economic activity by lowering taxes and increasing government spending The expansionary fiscal policy GT increases the amount of money available to the population The Government is budgeting for a 21 billion surplus in 2002-03 although most countries in the OECD are expected to be in deficit Strong growth in business investment should drive overall economic growth with low interest rates low inflation and falling unemployment Strong economic and productivity growth is leading to the creation of new jobs which will support continued growth in household consumption Stronger business investment will be reflected in higher imports With economic growth strengthening and employers becoming more confident employment is forecast to grow Strong and stable terms of trade has helped
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