Public Expenditure

Question 1

Public Expenditure and its parts

Answer 1

What a government spends their money on and is broken down into Current, Capital Expenditure and Transfer Payments

Question 2

Capital Expenditure with example

Answer 2

Spending on assets with long term benefits
e.g. spending on building new hospitals (^human capital)

Question 3

Current Expenditure with example

Answer 3

Recurring costs on assets that maintain the economy
e.g. wages/raw materials/medicine

Question 4

Transfer Payments

Answer 4

Gov spending without getting anything in return
e.g benefits/ subsidies
NOT INCLUDED IN AD

Question 5

What are factors that affect public expenditure

Answer 5

Age distribution, Incomes and Political Values

Question 6

Age Distribution

Answer 6

Gov w/ older aged population are likely commit a higher portion of spending to healthcare (capital) and education if younger

Question 7

Incomes

Answer 7

^in Incomes = ^D for gov g’s/s’s == ^pub expenditure
suggests that pub expenditure is inc elastic
DEPENDS ON the type of good (for inferior goods when incs ^ D falls)

Question 8

Political Values

Answer 8

high trust in gov == ^ gov spending
e.g Denmark
USA has low trust in gov
== ppl vote policies that reduce taxes (= reduced public expenditure