4.5 role of the state

Question 1

capital public expentiture

Answer 1

long term spending on assets eg. hospitals schools + infrastructure

Question 2

current public expenditure

Answer 2

short term spending eg. day to day running of the country

Question 3

transfer payments

Answer 3

a redistribution of income for which no good or service is provided in return eg. benefit payments

Question 4

where does money for public expenditure go to | 4 ways

Answer 4

taxation
public sector
paid for by the consumer eg. perscription drugs
selling off state assets

Question 5

reasons for public expenditure | 4 ways

Answer 5

tackle market failure
redistributing incomes
to supply merit + public goods
to support domestic industry

Question 6

why would public expenditure rise

Answer 6

as govt transfer payments increase

in times of recession to re start the economy, benefitting from the multiplier effect

Question 7

in periods of healthy growth, govt tends to

Answer 7

reduce spending + repay borrowing

Question 8

main sectors that public expenditure would impact most

Answer 8

productivity
living standards
crowding out
level of taxation
equality