Expansionary in 2010/11, contractionary in the current period.

I'm really sorry to say this, but I am going to have to give Formspring a rest for a while. At the moment I have over 1000 questions in my inbox, most of which are either direct insults, jokes or random characters bashed out on a keyboard. Wading through them all to find the sensible questions (like this one) is taking far too much of my time.

Over the next few weeks I will try to delete all of the pointless questions, and as long as I don't get too many more I will get back to answering those of you who have used this service in the way it was intended!

Mr Wood

The easiest option to use here is to relate it to real wages. If inflation is higher than the increase in my pay, then my real wage is being eroded. That means my standard of living will fall.

Sure - company tax is the best one to use.

I would start by looking at some of the alternatives, and then explore the strengths and weaknesses of each option. For example, if they don't use government bonds, they will need to borrow from overseas. This will result in higher net foreign debt (specifically, public debt). This is exactly the problem that we see in Greece, Spain, Portugal, Ireland and (to a slightly different degree) Italy and the USA at the moment.

No.

There is a reasonable argument to be made that the 2010/11 budget was expansionary, but the 2011/12 budget is certainly contractionary. Although it was a large deficit, it was much smaller than last year. Think about it this way - imagine that the government built three roads last year, and this year they are only building two. Both require government spending, but as we have gone from three to two the impact on growth and employment is negative.

The estimates suggest that the current budget will have fairly significant negative impact on the overall level of aggregate demand in the Australian economy.

You will find all of the details that you need here!

http://www.mrwood.com.au/article.asp?id=298

The tax free threshold could be increased, the income brackets could be broadened, or the higher marginal tax rates could be increased.

Higher interest rates can actually be very good for people who are retired. This is because they are unlikely to have a loan, but they may be living from the income that they can earn from their savings. If this is true, then when interest rates increase so will their income.

Sure. :)

I agree - this is a key skill, and it takes a LOT of practice. I am trying to write more updates that include analysis of graphs. This was the most recent one:

http://www.mrwood.com.au/article.asp?id=293

To answer this, you need to be able to define "labour force". The labour force is made up of people who are employed, and also those who are officially classified as unemployed. So a person who is "not in the labour force" is neither employed nor unemployed. For example, full time students, retired people, volunteers, people who are prevented from working due to disability, and those who choose to stay at home to care for their families.

I publish them one day ahead, if that's what you mean....

This is a really important question.

Yes, you need to know about 2008-2011. That is the whole reason my site exists! Before the end if the year I will update all of the statistics so that they are current; I will do that when the stats for the year ending June 2011 start to become available. That will begin happening during August, and continue through September.

Take out the word 'net' and you will get the idea. It really just means 'after everything is taken into account'.

See below....

See below....

Correct! In fact, there are a few countries with issues in this area....

See below....

See below....

You're right, but remember that borrowers in the USA will look for the lowest rates that they can find. That means they are unlikely to be borrowing much from Australia at the moment, and in other countries rates are much lower. Given the globalized nature of the economy, rates tend to move in a consistent way throughout the world.