Public Expenditure 4.5.1

Question 1

Define Capital Expenditure

Answer 1

What the government spends on long-term assets e.g hospitals

Question 2

Define Current Expenditure

Answer 2

What the government spends on recurring costs e.g wages

Question 3

Define Transfer payments

Answer 3

When the government spends money without getting anything in return e.g benefits

Question 4

Factors influencing public expenditure

Answer 4

Age Distribution
Incomes
Political Values

Question 5

How does Age distribution influence public expenditure

Answer 5

Ageing population - healthcare
Young population - education

Question 6

How do incomes influence public expenditure

Answer 6

An increase in income will increase public expenditure

Question 7

How do political values influence public expenditure

Answer 7

If government offers high taxes and expenditure and is trust worthy more likely to be voted for

Question 8

What 3 areas are affected by changes in public expenditure

Answer 8

Productivity and Growth
Living Standards and Equality
Crowding out

Question 9

How is productivity and growth affected when theres a change in public expenditure

Answer 9

Increase in PE, Increases productivity, LRAS Right, Economic Growth - NHS

Question 10

Define resource crowding out

Answer 10

When all resources in the economy are being used efficiently and the government increases public expenditure

Question 11

Define financial crowding out

Answer 11

When the government borrows money to increase public expenditure, leading to a big increase in the interest rate