Economics 2

Question 1

Explain central government

Answer 1

Responsible for overall national economic issues and the provision of goods and services such as national roads, railways, electricity supply and healthcare

Question 2

Explain local government

Answer 2

Responsible for the provision and maintenance of goods and services such as public housing and libraries

Question 3

Explain national budget

Answer 3

This is the governments estimate of its income and expenditure for the coming year

Question 4

Give four reasons for government involvement in the economy

Answer 4

To provide an income for people who cannot provide one for them selves

To provide services that are too important to ah d over to the private sector. Ex. Health

To provide finance for industries when the private sector is unable to provide it.

To make regulations concerning the running of the economy.

Question 5

Explain capital expenditure

Answer 5

Capital expenditure is spending on assets that will benefit the country for some years into the future. Ex. Building school

Question 6

Explain current expenditure

Answer 6

The governments day to day expenditure ex. Teachers wages

Question 7

Explain a balanced current budget

Answer 7

A balanced current budget happens when the planned current income equals the planned current expenditure

Question 8

Explain surplus budget

Answer 8

A surplus budget happens when the planned current income is greater than planned current expenditure

Question 9

Explain a deficit current budget

Answer 9

A deficit current budget happens when the planned current income is less than the planned current expenditure. In this case the government will have to borrow money

Question 10

Give ways to reduce deficit

Answer 10

Borrow money

Reduce expenditure

Question 11

Give examples of capital income

Answer 11

Surplus if any on budget
Income from the sale of semi state bodies eg.Aer lingus
EU grants
Borrowings

Question 12

Explain exchequer balance

Answer 12

The difference between total government revenue and total government expenditure (current and capital) in one year

Question 13

Explain national debt

Answer 13

The total amount of money owed by the central government at any given time

Question 14

Explain general government debt

Answer 14

The national debt plus all local government debt at any given time

Question 15

Explain debt servicing

Answer 15

Is the payment of interest on the national debt