Economics SA query! (1 Viewer)

[russ3l]

"Explain the Australian government's use of budget and fiscal policy to achieve economic growth and full employment." (3 marks)

How would you start this question and what would you say about budget and fiscal policy?

This came from the Tim Riley workbook to save further confusion from what I already have with this question

 

[dunjaaa]

I haven't covered unemployment but I'll have go
The Australian government uses fiscal policy through altering the level of expenditure and taxation to influence aggregate demand. In order to achieve economic growth and full employment, the government must adopt an expansionary fiscal stance through increasing the level of expenditure whilst reducing taxation. This will stimulate aggregate demand as consumption rises leading to economic growth. Increased consumption is reflective of increased output, thus the level of unemployment falls as firms attempt to increase productivity in order to satisfy consumer demand.

 

[Phaze]

Also worth noting that governments may also introduce policies to train long term unemployed people so that they can re-enter the workforce with up to date skills and be of demand.