undecided

A budget is an annual statement from the government of its income and expenditure plans for the next financial year1 . The balance of trade (or net exports , sometimes symbolized as NX ) is the difference between the monetary value of HYPERLINK "http /en .wikipedia .org /wiki /Export " \o "Export " exports and HYPERLINK "http /en .wikipedia .org /wiki /International_trade " \o "International trade " imports in an economy over a certain period of time2 . Both factors can have a immense impact on the economy , thus this essay will further examine Australia 's budget outcome and balance of trade

as well as recommend certain strategies to manage those both factors effectively

There are certain budget outcomes : fiscal surplus (exceeds expenditure ) 1 . Revenues include direct tax (personal and company indirect tax (goods and services tax ) and other revenues (dividends from public trading enterprises while expenditures consists of social welfare , health , education , defence and public administration1 . The Australian government measures the budget outcome with 2 methods the fiscal outcome and the underlying cash outcome1 . In a fiscal outcome the outcome is calculated by investment (excluding sales of fixed assets ) and also uses the accrual accounting method , including superannuation owed by the government to the public even if they are not repaid until retirement1 . While the underlying cash outcome uses the cash accounting method . Its fiscal surplus reached 14 .8 billion or 1 .5 of GDP in 2005-2006 and it estimates that it will be 11 .9 billion (1 .2 of GDP ) in 2006-2007 and 10 billion (0 .9 of GDP ) in 2007-20083 . However it underlying cash surplus in 2005-2006 reached 15 .8 billion (1 .6 of GDP ) and is estimated to be 13 .6 billion in 2006-2007 (1 .3 of GDP ) and 10 billion (1 ) in 2007-20083 . Its surplus decreases from 2005 to 2007 , which shows an expansionary stance meaning economic activity increases through reduced taxation and /or increased government spending . This occurs since if tax is reduced hence more money is available for spending and hence consumption increases and thus aggregate demand and economic activity . The decreased surplus may also be caused by the high volume of foreign investments , since it reached A 1 ,565 ,715 million4 . Foreign investments require returns and also depending on its exchange rate this will worsen its capital and financial account and hence reducing its surplus

Australia 's exports (merchandise ) reached A 168 ,113 million while its import arrived at A 180 ,786 million in 2006-2007 , resulting in a deficit of A 12 ,673 million4 . While its trade in services reached a surplus of A 1 ,876 million (2006-2007 ) 4 . Its deficit may be a result of its export base , since it exports are mainly from primary industry as Australia main exports are coal , iron ore , non-monetary gold , crude petroleum and aluminum ores . Primary goods are easy to produce and thus there are many sellers in the global market , price falls and hence trade income decreases4 . As well , agricultural commodities are highly protected and thus it is difficult for Australia to...