Public Expenditure Flashcards Preview

Economics Unit 4 > Public Expenditure > Flashcards

Flashcards in Public Expenditure Deck (9)
Loading flashcards...
1

What is public expenditure?

Government spending includes all forms of spending by central government and local governments

2

What are the three main types of spending?

1. Capital expenditure
2. Current expenditure
3 transfer payments

3

What does capital spending include?

Capital projects and creating new assets. Investing to increase capital stock of the economy--- hospitals and roads

4

What does current expenditure include?

Items that are recurring and only last a limited time --- teachers wages and public sector

5

What does transfer payments include?

From the government to individuals -- welfare payments

6

What are the two key measures of government spending?

1. Real government spending - adjusted for inflation
2. Government spending as a % of GDP- share of national income

7

Factors influencing the amount of public expenditure (4)

1. State of the economy-- level of unemployment
2. How efficient the market is- if efficient less spending as no market failure
3. The system of the market- different countries
4. Equity and Equality- if inequitable distribution of resources- GS increase and with inequality

8

Impacts of higher government spending (3)

1. More investment in education and infrastructure -- positive externalities help
2. Retribution of income
3. Fiscal policy- in recession

9

Evaluation of higher government spending (6)

1. Higher taxes to fund spending
2. Potential inefficiency of spending- lack a incentive
3. Crowding out- government tax to spend but leaves people without money anyway
4. Nested interests of public sector- once started spending it's hard to stop
5. Kind of spending- transfer payments can reduce efficiency
6. Efficiency- no reason to be inefficient