Government spending and Taxation

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  • Government Spending and Taxation
    • How to finance it
      • interest gained from loans
      • Rent from public owned land/buildings
      • privatising Gov owned firms
      • Taxes
        • Effects of Tax
          • stagflation
          • wage price    spiral
          • dependant on elasticity of demand in economy
          • negative multiplier
            • increase tax = less disposable income
    • how to spend it
      • Social priorities
        • education, healthcare etc
      • size/age of population
        • young = student loans
        • old = pensions
        • increasing population = higher spending
      • redistribution of income
        • level of poverty
      • debt interest
    • Effects of spending
      • opportunity cost
      • multiplier, if Gov spending increases as should AD
      • costs of correcting negative spending
        • Gov failure
      • crowing out
        • spending high in one sector will crow out other (private & public
      • Effects of Tax
        • stagflation
        • wage price    spiral
        • dependant on elasticity of demand in economy
        • negative multiplier
          • increase tax = less disposable income

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