The government has enough funding either to build coastal flood defences or to modernise equipment in state schools, but not both. It chooses to build the flood defences.
Which statement correctly identifies the opportunity cost of this decision?
The flood defences, because they use up all of the funding that was available
The money paid to building firms, because that is what the flood defences cost
Nothing, because the government already had the funding available to spend
The modernised school equipment, because it is the alternative that is given up
76 exam-style questions on OCR GCSE Economics 3.5 Fiscal policy, covering 3.5.1 Government spending and revenue, 3.5.2 Budget balance, surplus and deficit, 3.5.3 What is fiscal policy, 3.5.4 Calculate effects of taxes and spending, 3.5.5 Analyse effects of taxes and spending, 3.5.6 Costs and benefits of fiscal policy, and 3.5.7 Redistributing income and wealth. Each one has a worked solution and a mark scheme showing where the marks go.