2012-13 Budget

[Deleted User]

As we all know, next year's budget is a contractionary budget (deficit to surplus), and this in theory will have negative implications for growth, unemployment, etc. However, if we analyse the specifics of the budget, we will see that the government will particularly focus on the goal of equity, by increasing family benefits and the like, as well as unemployment by increasing training and education spending. Therefore, it is difficult to say whether the budget will actually increase or decrease living standards.

So if a question asks us to analyse the impact of the 2012-13 budget on overall living standards (worth 4 marks), then are we expected to give a definite answer on whether living standards will increase or decrease (if yes, which?) or can we actually sit on the fence and say that it is hard to tell due to the conflicting impacts between the theoretical impact and the actual specifics of the budget?

Thank you in advance.

[gummo]

Whichever answer you pick is fine as long as you justify it well and present it as a likely possibility, not a definite event. For this question I wrote that living standards would decrease in the short term but increase in the long term for much the same reasons that you mentioned.