KK15 - Automatic and Discretionary Stabalisers

Question 1

Overall Role of Stabalisers

Answer 1

-Changes levels of revenue and expenditure to help regulate level of economic activity and therefore AD

Question 2

Discretionary Stabalisers/ structural stabilisers

Answer 2

-Budget announcements that are deliberate and targeted to a specific group

Question 3

Discretionary Stabalisers - (low and middle-income tax offset (LMITO)

Answer 3

-Decrease government revenue (personal income tax), removes less from the economy and leaves more for individuals to spend

Question 4

Automatic Stabalisers - Cyclical Stabilisers

Answer 4

Non-deliberate policy actions that already exist automatically, dependent on changes to economic activity

Question 5

Automatic Stabalisers - Income Tax revenue

Answer 5

-Progressive income system means that as people move towards a higher tax bracket in a peak, the government pulls more money out of the economy through taxes, slowing economic growth
-Can also be a stabaliser during trough as more people in lower tax bracket

Question 6

Automatic Stabalisers - Welfare Expenditure

Answer 6

-During a trough, more people are unemployed etc. Here, welfare payments in place increase discretionary income levels, and stimulates consumer expenditure.

Question 7

Discretionary Stabalisers Examples - Excise Duty 2023-24 Budget

Answer 7

Increased Tobacco Excise by 5% for 3 years (starting September 2023)

Question 8

Discretionary Stabalisers Examples - Redistributive and “cost of living measures” 2023-34 Budget

Answer 8

$40 increase per fortnight on several welfare payments like jobseeker, youth allowance

Question 9

Discretionary Stabalisers Examples - Childcare Payments

Answer 9

1.2 million people received from cheaper childcare