The table below includes hypothetical economic information for the Australian Economy.

a)Describe the changes to the internal balance between year 1 and year 2.

b)How are changes in the country's internal balance likely to have affected government tax revenue and government welfare expenditure between year 1 and year 2? How is the budget outcome likely to be affected if the Government budgeted for a deficit.

c)Howhavethechangesinthecountry'sinternalbalancelikelytohaveinfluencedthe level of imports and exports between year 1 and year 2?

d)What is the likely effect of an increase in government infrastructure spending in the economy.

e)Explain how Monetary Policy may have been used to contribute to the changes in internal balance between year 1 and year 2.

Year 1Year 2

Economic Growth 3.5%-1.0%

Unemployment 4.5%6.7%

Inflation 4% 0.5%

Investment Expenditure ($ billions) 25.621.0

Consumption Expenditure ($ billions) 59.255.9

Exports($ billions) 16.519.2

Imports($ billions) 18.316.8