Th4.5: Public Expenditure

Question 1

The government spends money to control AD and achieve macroeconomic objectives, these being…

Answer 1

economic growth, low and stable inflation, balanced current account and low unemployment

Question 2

Moreover, how do the government aim for equity and equality?

Answer 2

by providing services to individuals who would otherwise not receive them

Question 3

How can government spending correct market failure?

Answer 3

by providing public goods and fixing externalities