Publc Expenditure Flashcards
1
Q
Capital expenditure
A
New public infrastructure
2
Q
Current expenditure
A
Money to run and provide public services
3
Q
Transfer payments
A
Welfare/benefits
4
Q
Crowding out
A
If gov in debts sell bonds
Lowers price so to increase price of bonds Inc interest rates
Prevents firms investing and spending
Higher tax required from higher gov spending
Prevents private sector investment
Inc in public demand crowds out private demand
5
Q
Evaluating crowding out
A
100% crowding out is remote
Keynesian economist argue fiscal deficit will crowd in
