2.2.4 - Government Spending

Question 1

Budget deficit

Answer 1

Government spending exceeds tax revenue earned

Question 2

Budget surplus

Answer 2

Government spending is less than tax revenue earned

Question 3

Balanced budget

Answer 3

Government spending is equal to tax revenue

Question 4

Cyclical budget deficit

Answer 4

Economic cycle e.g. country is in recession so government spending exceeds tax revenue

Question 5

Structural budget deficit

Answer 5

• government spending exceeds tax revenue because the government are spending money on capital projects

Question 6

Fiscal policy

Answer 6

How the government spends its tax revenue

Question 7

Discretionary fiscal policy

Answer 7

Direct alteration of government expenditure or taxation

Question 8

Current government spending

Answer 8

• maintenance of public services e.g. NHS
• payment of public sector wages e.g. wages

Question 9

How can government spending affect income

Answer 9

• direct affects of welfare spending e.g state pension
• creates jobs both in the public and private sector
• subsidies may help to keep prices lower than they might otherwise be