Role Of Government In Mixed Economies Such As Australia

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and even distribution of income (though CSSB, tax)
2) Provide a limited range of goods and services (Aust post)
3) General economic management through macro and micro economic
policies.

In 96/97 the CAD fell to $20.9bn from the $27bn blowout during 95/96. This was
largely due to a fall in domestic spending which lead to a slight rise in
national savings. Inflation remained low and fell between the RBA's 2-3% target.
This gave way to the RBA's 3 consecutive drops in interest rates to stimulate
the economy. Economic growth has stabilised between 3-4%. Although this is a
reasonable figure, a higher growth rate is required if unemployment is to fall
from the 8.6% is has averaged for the past year. Overall economic performance
has been reasonable but current figures show the problems with our external
balance and unemployment will not be solved any time soon.

Fiscal policy is the government's use of the Budget to achieve its economic
management goals. This is done ...

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obligations.

At the same time a reduction in the deficit will increase national savings. By
reducing the deficit, the government does not need as much national savings in
order to finance the budget. This will leave a larger pool of savings to fund
investment. Although a contractionary fiscal stance will increase public saving,
they may decrease private savings. Cuts in government spending to programs aimed
at increasing private savings (such as Austudy) have meant that the private
sector must cover the costs, forgoing saving opportunities. This will mean a
lower level of private savings but not enough to offset the increase in public
saving. On the whole national saving increases.

Due ...

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