Economics for Business Individual Essay
Fiscal Policy
According to Driver, (2010, p. 86) fiscal policy is the collective government policy relating to spending and taxation and is usually used to evaluate how government policies affect the economy at large. There are two very crucial objectives of fiscal policy; first is to distribute the goods that contribute to the welfare of the public and long-term growth of the economy and secondly is to facilitate the stabilization of the cyclical fluctuation of the economy (Carmignani, 2013, p 1). As a supplement, on the other hand, the budget facilitates the accomplishing of these objectives. The purpose of this discussion will be evaluating the fiscal policy as implemented by the government of Australia between 2010 and 2015. The study will state whether the Australian Government followed expansionary or contractionary fiscal policy over the stated period. The study will also discuss on whether budget deficit always indicate an expansionary fiscal policy and whether budget surplus always indicate that fiscal policy is contractionary. The study will also look into the May 2015 budget to determine whether the Australian government implemented the expansionary or contractionary fiscal policy. Finally, the study will ascertain on the effectiveness of the Australia’s fiscal policy between 2010 and 2015.
Fiscal Policy between 2010 and 2015
The two approaches of fiscal policy are expansionary policy and contractionary policy. Under expansionary policy, the government spends more money through such expenditures as security, infrastructure projects, health facilities, education and many other areas to add more money to the economy. Additionally, lowering of taxes is another aspect of expansionary policy of adding more money to the economy through increased spending. Lowering of taxes allows individuals to keep and spend more