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1. During an economic contraction, why is it likely that the federal government budget will move into deficit?
2. Identify and discuss whether each of the following is: an expansionary fiscal policy; a contractionary fiscal policy; or not a fiscal policy.
i. The personal income tax rate is lowered.
ii. The government increases spending on defence due to a change in spending priorities.
iii. The company income tax rate is lowered.
iv. New South Wales builds a new tollway to expand employment and ease traffic congestion.
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