Th4.5: Types of Expenditure

Question 1

What are the four types of expenditure?

Answer 1

capital government expenditure
general government final consumption
transfer payments
current government expenditure

Question 2

Capital government expenditure

Answer 2

spending on investment goods such as new roads, schools and hospitals which will be consumed in over a year

Question 3

General government final consumption

Answer 3

spending on goods and services that will be consumed within the next year, such as public-sector salaries

Question 4

Transfer payments

Answer 4

government payments for which there is no corresponding output, where money is taken from one group and given to another e.g benefits and pensions

Question 5

Current government expenditure

Answer 5

general government final consumption plus transfer payments plus interest payments

Question 6

What else does the government have to spend money on?

Answer 6

interest payments for national debt

Question 7

What are the major areas of expenditure?

Answer 7

defence 6%, protection 4%, education 12%, pensions 20%, welfare 15%, transport 2% and health care 18%

Question 8

What is 7% of all government spending on?

Answer 8

interest repayments of loans