Answer to Question #48926 in Macroeconomics for Mohamed

Question

What is the effect of the new expenditure plan impact on income and consumption?

Answer 1

The Expenditure (Budget) Plan is a key policy document of the Government, announcing tax changes, new or enhanced programs and anticipated revenues. It also provides an economic forecast. While the Budget, like a Supply Bill, is also a confidence measure, the Budget does not provide parliamentary expenditure authority. Given the differences in timing of the preparation of the Main Estimates and the Budget, it is not always possible to include emerging priorities and items announced in the Government's Budget in the Main Estimates. Additional requirements for initiatives included in the 2013 Budget will be presented in future Estimates.
If the new expenditure plan requires more spending than previous, both consumption and income will rise, but if the new expenditure plan requires less spending than previous, both consumption and income will fall.