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Financing a deficit help (1 Viewer)
- Thread starter esraa
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krnofdrg
Mq Law Student :)
Go visit the fiscal policy chapter 14.
methods of financing deficits
-Borrowing from domestic private sector, selling CGS to domestic financial markets. This may lead to "Crowding out effect", how a budget deficit will soak up funds in Australia's domestic savings pool, putting upward pressure on i/r and leading to reduction on private sector investment and spending. (Aggregate Demand slows)
-Borrow from RBA by borrowing from RBA (it's called 'moneterising the deficit')
This is printing out money in order to finance expenditures, just like America does. Aus has not done this though since 1982 as the deregulation of financial markets occured, the gov does not want to increase money supply and add inflation. So fiscal and monetary policy have no connection together.
-Borow funds in overseas financial markets by sell new CGS in return for foreign securities (But remember we want to maintain external stability).
Selling government assets such as Commonwelath land or Commonwealth shares in businesses such as Telstra, Aus post and etc..
methods of financing deficits
-Borrowing from domestic private sector, selling CGS to domestic financial markets. This may lead to "Crowding out effect", how a budget deficit will soak up funds in Australia's domestic savings pool, putting upward pressure on i/r and leading to reduction on private sector investment and spending. (Aggregate Demand slows)
-Borrow from RBA by borrowing from RBA (it's called 'moneterising the deficit')
This is printing out money in order to finance expenditures, just like America does. Aus has not done this though since 1982 as the deregulation of financial markets occured, the gov does not want to increase money supply and add inflation. So fiscal and monetary policy have no connection together.
-Borow funds in overseas financial markets by sell new CGS in return for foreign securities (But remember we want to maintain external stability).
Selling government assets such as Commonwelath land or Commonwealth shares in businesses such as Telstra, Aus post and etc..
Last edited:
mystery_meat
New Member
America does not print out money to finance its deficits.
And fiscal and monetary policy are connected; the most effective and stragetic policies/stances taken are those that consider others, and the effects of those policies. If a contractionary budget stance is adopted, then inflation is likely to eventually lessen along the need for higher cash and interest rates. It is all very much connected.
Having said that, you should look in your textbook - as krnofdrg suggested - because all the different methods you need to know for the HSC should be in there.
And fiscal and monetary policy are connected; the most effective and stragetic policies/stances taken are those that consider others, and the effects of those policies. If a contractionary budget stance is adopted, then inflation is likely to eventually lessen along the need for higher cash and interest rates. It is all very much connected.
Having said that, you should look in your textbook - as krnofdrg suggested - because all the different methods you need to know for the HSC should be in there.
krnofdrg
Mq Law Student :)
My bad they are indirectly related :0... stupid textbook...
@mystery, the America bit was a joke
