Economics Assessment : Fiscal Policy + 05 Budget (1 Viewer)

[Brokefang]

Hey guys,
I've only been browsing around here, not much posting but i figured i might get into it for some help~~

For our economics assessment, we've been asked to research 4 different short answer questions then answer them in class:

1. Define Fiscal Policy and outline possible budget outcomes

2. Explain how Fiscal Policy can influence:
-Resource Allocation
-Economic Stability
-Distribution of Income

3. Outline he link between Fiscal Policy and the Current Account Deficit. (Hint: refer to the "Twin Deficits Argument")

4. Discuss the likely impacts of recent budgets on:
-Distribution of income
-Economic Stability (internal and external balance)
-Resource Allocation

The first two are simple answers out of the textbook and minimal research, i've done those, but im having trouble with question 3 and 4.

Any help would be appreciated =)

 

[Left-ism]

for question 3 -
examine what fiscal policy involves- government manipulation of the budget to influence the economy. Now a deficeit budget acts as an injection stimulating growth [or thats what it should do]. Growth however leads to increased demand, particularly for imported goods, which detriments the current account. This is essentially the link. YOu should look into it in more detail of course.
Question 4
Look at taxation changes and allocation of funds. this isnt very hard if you actually examine budgets. Look at where the money is going and then its implications. This sort of action-effect deciphering is a crucial skill in economics..try and develop it by thinking for yourself.

Hope that helps