Government Expenditure - Theories
Government expenditure has a significant impact on the economy in a variety of ways and so in this section we will look at relevant theories about how it affects the economy and individuals. The theories considered are:
- T1 Transfer payments - who transfers what to whom?
- T2 Public goods and merit goods - what are they and who gets them?
- T3 Current spending vs. capital spending - does it matter what the money is spent on?
- T4 Automatic spending vs. discretionary spending - who is really in control of spending?
- T5 The multiplier - £10bn expenditure = £20bn income?