Fiscal policy

Question 1

Describe the history of UK government spending

Answer 1

Peaked during WW2
Fell until another peak in 2009/10
Fell again due to the austerity agenda since 2010
Rose again due to pandemic

Question 2

Why does spending fluctuate so much

Answer 2

1. Automatic stabilisers, which are the automatic fiscal changes that occur due to the economic cycle
   i.e. increased spending on welfare in a recession as there is high unemployment
2. The government has intervened more to correct inefficiencies and inequity in recent times, which costs money