A government increases its spending on monthly financial assistance grants directly paid to low-income households, and simultaneously hires additional civil servants to manage and process these applications.
How should these two types of government expenditure be classified?
Financial assistance grants are classified as current expenditure, while the wages of administrative civil servants are classified as transfer payments.
Financial assistance grants are classified as transfer payments, while the wages of administrative civil servants are classified as capital expenditure.
Financial assistance grants are classified as transfer payments, while the wages of administrative civil servants are classified as current expenditure.
Financial assistance grants are classified as current expenditure, while the wages of administrative civil servants are classified as capital expenditure.
3 exam-style questions on Edexcel A A Level Economics 4.5.1 Public expenditure. Each one has a worked solution and a mark scheme showing where the marks go.