Set One [6 marks]

Consider these graphs:

i)The graphs above show that governments create fluctuations (or cycles) by running fiscal surpluses and then deficits.

IndicateT F#

Explanation:

ii)Fiscal demand-stimulus in Australia today would be greater for a total tax cut of $1b.to low-income earners than a total tax cut of $1b. for high-income earners.

IndicateTF#

Explanation:

iii)In short-run equilibrium, leakages equal injections. So T=G and the budget is balanced.

IndicateTF#

Explanation: