- 10 Marks
Question
Through functional classification of public expenditure, the economic effects of various government activities can be determined or measured, which would also be helpful for proper policy formulation.
Required:
- Identify and explain TWO functional areas of public expenditure.
- Discuss TWO effects on the economy.
Answer
- Functional Areas of Public Expenditure:
- Economic Services: This includes public spending on agriculture, energy, transportation, and industry. Such spending fosters growth in infrastructure and enhances productive capacities of the economy.
- Social Services: This comprises expenditures on education, health, and housing, which are aimed at improving the standard of living and social welfare of the population.
- Effects on the Economy:
- Employment Generation: Public expenditure on economic services, like infrastructure development, creates jobs and boosts economic activities, leading to improved income levels.
- Redistribution of Income: Public spending on social services helps reduce income inequality by supporting lower-income groups with subsidies, healthcare, and education, which in turn enhances their income-earning capacity.
- Topic: Government Expenditure
- Series: NOV 2019
- Uploader: Kofi