CHAPTER 79 PUBLIC EXPENDITURE

Question 1

Capital government expenditure

Answer 1

Spending by government on investment goods, such as new roads, new hospitals or new street lighting.

Question 2

Crowding in

Answer 2

In the context of public sector spending, crowding in occurs when extra government spending leads to higher private sector spending.

Question 3

Crowding out

Answer 3

In the context of public sector spending, crowding out occurs when extra government spending leads to lower private sector spending.

Question 4

Current government expenditure

Answer 4

Spending by government on goods and services which will be consumed in the short term, such as teachers’ salaries or heating for government buildings; it also includes transfer payments and debt interest.

Question 5

Transfer payments

Answer 5

Spending for which there is no corresponding real output; in government expenditure, transfer payments are welfare payments such as the state pension or child benefit.