31) Government expenditure and trade

Question 1

What is government spending?

Answer 1

The sum total of all spending by the government

Question 2

What are some examples of government spending?

Answer 2

• NHS
• Defence
• Roads
• Police
• Education

Question 3

What factors affect government spending in the economy?

Answer 3

• Position of the economic cycle
• Public opinion
• Which political party is in power
• Budget defecits

Question 4

What factors affect the net trade balance in the economy?

Answer 4

1) The relative prices of goods and services
2) Real income in the domestic economy
3) The exchange rate
4) The state of the world economy
5) The degree of protectionism
6) Whether the country can produce the good/service (e.g. bananas)
7) Government policy

Question 5

What is net exports (net trade balance)?

Answer 5

Exports - Imports