- 5 Marks
Question
Public expenditure can be in the form of public works and transfer payments. Public works are expenditure on durable goods, primarily fixed structures produced by the government. They include expenditure on public works such as roads, schools, hospitals, and irrigation. Transfer payments include interest on public debt, government wages and salaries, pension, insurance, and social security benefits.
Required:
Explain FIVE (5) goals of public expenditures.
Answer
- During a Period of Depression: Public expenditure injects funds into the economy to stabilize it during depression by increasing aggregate demand.
- During Wars: Governments raise additional resources to finance wars or conflicts.
- Economic Development: In developing countries, public expenditure aids rapid development and breaks the vicious cycle of poverty.
- Infrastructural Development: Public expenditure develops social and economic infrastructure like roads, railways, and power projects.
- Employment Creation: Public expenditure stimulates employment through government projects and spending.
- Tags: Economic Development, Fiscal Policy, Public Expenditure
- Level: Level 2
- Topic: Overview of the Ghanaian Tax System and Fiscal Policy
- Series: MAY 2021
- Uploader: Theophilus