The causes of current account deficit.

The causes of current account deficit Australia's CAD will be one of the entering years biggest economic stories in the media at the end of the financial year 1998-1999. There is a likelihood the deficit will increase to an amount to per 6 percent of gross domestic products. In Australia for the last two centuries the balance has almost been deficit the past twenty yeas the level of the deficit has increased notably. In 1970's the …

…effects on our international transactions weaken aggregate demand in Australia and accordingly tend to offset any expansionary effects of the government's fiscal program. It con be show, with a fixed exchange rate these adverse secondary effects are precluded, and fiscal policy is likely to be correspondingly more effective. These considerations help to explain why fiscal policy has come to be overshadowed by an increased reliance on monetary policy as the primary instrument of macroeconomic stabilization.