LS15- Public Expenditure Flashcards
1
Q
Current government expenditure
A
- governments day to day expenditure on goods and services
- e.g. wages of civil servants and drugs used by NHS
2
Q
Capital government expenditure
A
- government expenditure on infrastructure such as roads and hospitals
3
Q
Transfer payments
A
- payments given by the state to individuals e.g. pensions
4
Q
Reasons for changing size and composition of public expenditure
A
- economic development/ rising incomes
- changes in structure of population
- stage in business cycle
- financial crisis
- levels of government
5
Q
Impacts of changes in levels of public expenditure
A
- productivity
- living standards
- taxation
- inequality
- crowding out/in
6
Q
How public expenditure affects productivity + growth
A
- free market argue gov spending is wasteful and inefficient- however, gov are able to enjoy EoS when it provides goods, and this improves productivity
- also provides infrastructure, such as roads, necessary for economy to run efficiently
- education creates human capital necessary for growth whilst healthcare system reduces number of days lost by workers due to illness
- through spending, government can create a multiplier effect and this can be focused on areas of the country with high unemployment, creating growth
7
Q
How public expenditure affects living standards
A
- corrects market failure and provides public goods to improve social welfare
- important to reduce absolute poverty, health levels and infrastructure
8
Q
How public spending increases equality
A
- it leads to redistribution and helps to provide a minimum standard of living for the poorest in society
- ensures everyone has access to basic goods, such as education and healthcare, which will help to give them a fair start in life
