Th2.2: Influences on Government Expenditure

Question 1

What are the three influences on government expenditure?

Answer 1

the trade cycle
fiscal policy
age distribution of the population

Question 2

The trade cycle

Answer 2

decisions over government expenditure may be made in order to manage AD, and therefore regulate the trade cycle e.g in a recession the government may increase spending in order to increase demand to reduce unemployment

Question 3

Fiscal policy

Answer 3

the level of government spending depends on what they lay out in their fiscal policy. governments can vary what they spend each year and this is set out in their budget

Question 4

Age distribution of the population

Answer 4

the more dependents in the economy (young and old) the higher government spending tends to be
old - pensions
young - education