Problem
In a recent interview with Insiders, the Minister for Finance, Kate Gallagher, claimed that "We have inherited the worst set of budget books." As an economic adviser to the Minister, you suggest that austerity measures, such as cutting back on government spending, are necessary for bringing the budget back in black. Use your understanding of the planned aggregate expenditure function and the 45-degree diagram to illustrate the effect of austerity measures. Why might your recommendation fail to bring the budget back in black?