Public expenditure vs private
expenditure Test Questions and
Answers
Uses of public expenditure (6) - Answer-National and regional governments spend
money on public goods, merit goods, supporting vulnerable goods, helping private
sector industries, covering losses incurred by state own enterprises and managing the
economy.
How is public expenditure financed (3)? - Answer-taxation, borrowing from the profits of
state owned enterprises and privatisation.
What does the amount of tax a government can raise depend on? (4) - Answer-income
of country, willingness of citizens to pay taxes, reaction of firms and workers to tax
changes and tax rates in other countries.
What is a flat tax? - Answer-A tax with only one rate, which is often low.
What is an informal economy? - Answer-The part of an economy that is neither taxed
nor monitored by any form of government.
Ability of a government to borrow will depend on.. - Answer-Its credit worthiness at
home at abroad.
What will the amount borrowed by a government depend on? (3) - Answer-state of
economy, level of economic development, acceptable rate of interest.
How does government influence private sector expenditure? (4) - Answer-taxing income
and expenditure, providing subsidies, giving grants, influencing the level of economic
activity.
Advantages of private sector expenditure - Answer-
What is public expenditure? - Answer-Expenditure done by the public sector.
What are the 2 categories of public expenditure? - Answer-exhaustive spending and
transfer payments.
What is exhaustive spending? - Answer-A type of public expenditure that includes the
direct purchase of goods and services (medical equipment, paying the police and
building roads).
expenditure Test Questions and
Answers
Uses of public expenditure (6) - Answer-National and regional governments spend
money on public goods, merit goods, supporting vulnerable goods, helping private
sector industries, covering losses incurred by state own enterprises and managing the
economy.
How is public expenditure financed (3)? - Answer-taxation, borrowing from the profits of
state owned enterprises and privatisation.
What does the amount of tax a government can raise depend on? (4) - Answer-income
of country, willingness of citizens to pay taxes, reaction of firms and workers to tax
changes and tax rates in other countries.
What is a flat tax? - Answer-A tax with only one rate, which is often low.
What is an informal economy? - Answer-The part of an economy that is neither taxed
nor monitored by any form of government.
Ability of a government to borrow will depend on.. - Answer-Its credit worthiness at
home at abroad.
What will the amount borrowed by a government depend on? (3) - Answer-state of
economy, level of economic development, acceptable rate of interest.
How does government influence private sector expenditure? (4) - Answer-taxing income
and expenditure, providing subsidies, giving grants, influencing the level of economic
activity.
Advantages of private sector expenditure - Answer-
What is public expenditure? - Answer-Expenditure done by the public sector.
What are the 2 categories of public expenditure? - Answer-exhaustive spending and
transfer payments.
What is exhaustive spending? - Answer-A type of public expenditure that includes the
direct purchase of goods and services (medical equipment, paying the police and
building roads).
