A country's government expects to run budget deficits for three years while constructing a freight railway linking manufacturing areas to a port. Of the total borrowing over the three years, £28 billion will be spent on the railway. The rest will pay day-to-day costs.
| Year | Government revenue (£bn) | Government spending (£bn) |
|---|---|---|
| 1 | 220 | 230 |
| 2 | 226 | 238 |
| 3 | 234 | 246 |
Using the data, explain one problem this borrowing could cause for the government and why spending most of it on the railway may make that problem less serious.
104 exam-style questions on AQA GCSE Economics 2.3 How the government manages the economy, covering 2.3.1a Fiscal policy and income and expenditure, 2.3.1b Fiscal policy and government objectives, 2.3.1c The government budget, 2.3.2a The meaning of monetary policy, 2.3.2b Uses of monetary policy, 2.3.3a Supply-side policies and their trade-offs, 2.3.3b Using supply-side policies, and 2.3.4 Policies to correct positive and negative externalities. Each one has a worked solution and a mark scheme showing where the marks go.