ABSTRACT
This chapter attempts to provide a useful analytical framework. A basically Keynesian framework will be adopted. The national income or national product account will be used. The government, in its role of regulating the economy, is concerned with the impact of these money flows on the real resources of the economy. It is usual in these days to consider that labour provides the upper limit to the amount of goods and services that can be obtained from the economy, but in other circumstances the limit may be provided by other factors of production. Political reasons appear to underly many objections to departing from a balanced Budget. It is argued that unbalanced Budgets can lead to currency depreciation. In trying to regulate the economy, the fundamental problem is to diagnose the trends in the economy. Domestic refers to the fact that exports, imports and net flows of money into the economy have not been taken into account.
