Government Spending Flashcards
What is capital spending
Investment spending by the government
What happens when GDP is rising for the Government
Government receives more tax revenue
More revenue from income tax - More people are in work
Extra Revenue from Corporation Tax - Profits Rise
Higher Revenue from VAT - People spend more on goods and services
Government will spend less
Why will the government likely spend less during economic growth
Low unemployment rates - less spending on unemployment benefits
Working households see pay increases - less spent on other forms of benefits
Some people will choose private services as opposed to public services - less spending on public goods
How can state spending affect household income
Direct effects of welfare
Creates jobs in public and private sector
Subsidies keep prices lower than they might be
