2.2.4: Government Spending

Question 1

What is Government Spending?

Answer 1

• Spending by the government on public sector goods and services such as education, healthcare and defence

Question 2

What are the different types of gov spending?

Answer 2

• Current Spending
• Capital Spending
• Welfare Spending
• Debt Interest Payments

Question 3

What are some example of current spending?

Answer 3

• Salaries of teachers, NHS workers
• Maintenance for potholes
  -Supplies for the army

Question 4

What are some examples for capital spending?

Answer 4

• Construction of new motorways
• Flood defence schemes
• Equipment for defence and NHS

Question 5

What is the difference between a budget deficit and national debt?

Answer 5

• A budget deficit is when government spending exceeds tax revenue
• But a national debt is when the total budget deficits over time

Question 6

How does the trade cycle affect government spending?

Answer 6

• In a recession, the government may increase spending in order to increase demand and to reduce employment.
• Government spending also automatically rises during a recession as they have to spend more on employment benefits