Methods of Financing a Deficit (HSC SSCE Economics): Flashcards
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Budget deficit
Budget deficit
When govt spending exceeds revenue in a financial year
Main Australian deficit financing method
Main Australian deficit financing method
Borrowing from domestic private sector
Financial instrument for deficit financing
Financial instrument for deficit financing
Treasury Bonds
Crowding out effect
Crowding out effect
Govt borrowing raises rates, reducing private investment
When crowding out is minimal
When crowding out is minimal
During recessions
Monetary financing (definition)
Monetary financing (definition)
Govt borrows from Reserve Bank (printing money)
Why Australia avoids monetary financing
Why Australia avoids monetary financing
Inflation risk & need for policy independence
Asset sales limitation
Asset sales limitation
Don't reduce underlying cash deficit or net operating deficit
Future Fund value in 2023
Future Fund value in 2023
$251 billion
Public vs foreign debt
Public vs foreign debt
Public=govt only; Foreign=total to overseas (incl. private)