Government expenditure (G) - (4)

What is government expenditure influenced by ?

• Government expenditure is influenced by the trade/business cycle (The stages of economic growth that an economy moves through including boom, slowdown, recession and recovery) and spending linked to achieving policy aims

  • Government expenditure can happen on a local level (e.g., Kent County Council) or a national level (central government)

A Table Explaining the Influence of the Trade Cycle and Policy Aims on Government Expenditure

A Table Explaining the Influence of the Trade Cycle and Policy Aims on Government Expenditure

Influence of The Trade/Business Cycle	Influence of Policy Aims
Unemployment decreases with a booming economy, leading to a lower level of means - tested benefit payments (The level of household income determines the level of benefit paid by the government. Low income = higher payment)  and vice versa Tax revenue increases with a booming economy and can be used to pay back government debt or increase expenditure on public/merit goods and vice versa	Fiscal policy (The use of government spending and taxation to influence the economy and achieve macroeconomic objectives -) is set once a year and announced during the presentation of the Government's budget Expenditure is directly related to the Government's objectives and policy aims E.g., A policy aimed at upgrading Britain's military requires increased expenditure

X

X

X

X