Economics Principles and Practices © 2012 GeorgiaChapter 10:
Government SpendingChapter OverviewsSection 1: The Economics of Government Spending
The government has two types of expenditures: goods and services, and transfer payments. The government buys many goods, such as tanks, planes, ships, space shuttles, office buildings, land for parks, and capital goods for schools and laboratories. This spending affects the distribution of income and competes with the private sector for scarce resources. As a result, this spending has a large impact on the nation's economy. Section 2: Federal, State, and Local Government Expenditures
The president, the House of Representatives, and the Senate develop and approve the federal budget. The largest components of the federal budget are Social Security, national defense, income security, and health care services. State expenditures are intergovernmental transfers, public welfare, insurance contributions, and higher education. On a local level, the government spends money on elementary and secondary education, public utilities, hospitals, police protection, interest on debt, public welfare, and highways. Section 3: Deficits, Surpluses, and the National Debt
Deficit spending adds to the federal national debt. The national debt affects the
distribution of income and transfers purchasing power from the private to the public sector. Attempts to control the deficit have taken the form of mandated deficit targets and pay-as-you-go provisions. |