Government Expenditure [Virtual Economy]

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Introduction to the government expenditure section of the Virtual Economy.

Policy Tools - Government Expenditure

Government expenditure in the UK for 2001/2002 is expected to be £394bn. That is:


A lot of money! Seen like this, the importance of government expenditure to the economy is very clear. The government pays for defence, education, social security, health, roads, museums, libraries, the police and courts and.............. All these are vital public services and any changes in the government's spending policies will have a major impact on the economy.

Adjusting the level of government expenditure is a key part of the government's fiscal policy Look up Fiscal Policy in glossary . It is possible to change the level of government expenditure in the model Model and see the effect both on the macroeconomic targets and on individual families.

To help see the effects of expenditure changes on the economy there are a variety of resources:

  • An explanation of government expenditure and what it is spent on
  • Relevant theories about government expenditure
  • Worksheets to help see the impact of changes in the level of government expenditure on the economy