Assume that the Australian Treasurer announces a budget deficit of A$80 billion in his budget report to the Parliament.

2 marks

a) If the Government collected $470 billion in tax revenue, how much did it spend for the financial year?

b) Explain the Government's intention behind the macroeconomic policy NOT to run a budget surplus over this period?

3 marks

(2 marks + 3 marks = 5 marks)