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CAIE IGCSE Economics 4.2.2 Reasons for government spending

Classify an item as public expenditure, then trace how spending on health, education, transport, defence or benefits can affect access, productivity, demand and equity.

Syllabus
2027–2029
Course
Economics 0455

Exam points

  • Distinguish government expenditure from private investment or household spending.
  • Explain how spending on health, education or infrastructure can raise productivity and output.
  • Analyse how welfare, subsidies or public services affect access, income distribution and demand.

4.2.2—Reasons for government spending question 1

[Maximum number: 8]

Free goods and economic goods are consumed in Poland. In 2020, demand for both economic goods and factors of production increased in Poland. For example, Polish consumers demanded more football shirts and the Polish government increased its spending on housing for the country's population.

Discuss whether or not an increase in government spending on housing would benefit an economy.

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