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A LevelEconomicsEdexcelEconomics ARevision Notes2. The UK Economy: Performance & Policies2.2 Aggregate Demand (AD)Government Expenditure (G)

Government Expenditure (G) (Edexcel A Level Economics A)

Revision Note

Steve Vorster

Written by: Steve Vorster

Reviewed by: Jenna Quinn

Influences on Government Expenditure

  • Government expenditure is influenced by the trade/business cycle and spending linked to achieving policy aims

    • Government expenditure can happen on a local level (e.g., Kent County Council) or a national level (central government)

Examiner Tips and Tricks

The top three biggest areas of government expenditure in the UK are:

  1. Social Protection (Welfare payments such as state pension, universal credit)

  2. Health care services

  3. Education


A Table Explaining the Influence of the Trade Cycle and Policy Aims on Government Expenditure

Influence of The Trade/Business Cycle

Influence of Policy Aims

  • Unemployment decreases with a booming economy, leading to a lower level of means-tested benefit payments  and vice versa

  • Tax revenue increases with a booming economy and can be used to pay back government debt or increase expenditure on public/merit goods and vice versa

  • Fiscal Policy is set once a year and announced during the presentation of the Government's budget

  • Expenditure is directly related to the Government's objectives and policy aims

  • E.g., A policy aimed at upgrading Britain's military requires increased expenditure

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    Steve Vorster

    Author: Steve Vorster

    Expertise: Economics & Business Subject Lead

    Steve has taught A Level, GCSE, IGCSE Business and Economics - as well as IBDP Economics and Business Management. He is an IBDP Examiner and IGCSE textbook author. His students regularly achieve 90-100% in their final exams. Steve has been the Assistant Head of Sixth Form for a school in Devon, and Head of Economics at the world's largest International school in Singapore. He loves to create resources which speed up student learning and are easily accessible by all.

    Jenna Quinn

    Author: Jenna Quinn

    Expertise: Head of New Subjects

    Jenna studied at Cardiff University before training to become a science teacher at the University of Bath specialising in Biology (although she loves teaching all three sciences at GCSE level!). Teaching is her passion, and with 10 years experience teaching across a wide range of specifications – from GCSE and A Level Biology in the UK to IGCSE and IB Biology internationally – she knows what is required to pass those Biology exams.