The budget outcome

Question 1

Balance budget

Answer 1

Revenues are the same as expenses.
It is neither expansionary or contractionary.
Has little effect on production, employment and inflation.

Question 2

Budget Surplus

Answer 2

• Revenue exceeds expenditure
• It is contractionary
• It slows production, employment and inflation

What to do with the surplus:
Repay debt
Save with the RBA
Add to balances in special savings funds

Question 3

Budget Deficit

Answer 3

• Revenue is less than expenditure
• It is expansionary
• It stimulates production, employment and inflation.

Financed by:
Borrow from RBA
Borrow from public or financial sector
Overseas borrowing