Answer to Question #47667 in Macroeconomics for yuvi singh

Question

describe how the Australian government can run a balanced budget and yet stimulate a weak economy. Explain if this is more effective compared to the Government running a budget deficit by cutting personal taxes

Answer 1

Deficit spending is the amount by which spending exceeds revenue over a particular period of time, also called simply deficit, or budget deficit; the opposite of budget surplus.
Australia's conservative government unveiled an ambitious budget to tackle a yawning deficit, but also one that risks a voter backlash with tax increases and aggressive spending cuts at a time of rising unease over the economy.
If a reduction in a structural deficit is desired, either revenue must increase, spending must decrease, or both. Taxes may be increased for everyone/every entity across the board or lawmakers may decide to assign that tax burden to specific groups of people (higher-income individuals, businesses, etc.) Lawmakers may also decide to cut government spending.
Like with taxes, they could decide to cut the budgets of every government agency/entity by the same percentage or they may decide to give a greater budget cut to specific agencies. Many, if not all, of these decisions made by lawmakers are based on political ideology, popularity with their electorate, or popularity with their donors.
Similar to increasing taxes, changes can be made to the tax code that increases tax revenue. Closing tax loopholes and allowing fewer deductions are different from the act of increasing taxes but essentially hEvery year, the government must pay debt service payments on their overall public debt. These payments include principal and interest payments. Occasionally, the government has the opportunity to refinance some of their public debt to afford them lower debt service payments. Doing this would allow the government to cut expenditures without cutting government spending.ave the same effect.