Lesson 4.5.1

4.5.1 Public expenditure Quiz: Pearson Edexcel Economics, Unit 4

20 questions

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Lesson 4.5.1, Public expenditure: 20 multiple choice questions for the Pearson Edexcel Economics (9EC0), Unit 4: Theme 4: A global perspective, written with Revision Ninja.

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The 20 questions

  1. Which of the following is an example of government capital expenditure?

    • Building a hospital
    • Paying state pensions
    • Buying office stationery
    • Paying teacher salaries

  2. Which of the following is an example of government current expenditure?

    • NHS staff wages
    • Paying state pensions
    • Constructing new schools
    • Building new motorways

  3. Which of the following is classified as a government transfer payment?

    • State pension
    • Paying doctor salaries
    • Buying military hardware
    • Building a bridge

  4. Which demographic factor increases government spending relative to GDP over time?

    • Ageing population
    • Falling life expectancy
    • Decreasing retirement age
    • Higher birth rates

  5. If government spending is £900bn and GDP is £2,000bn, what is public expenditure as a percentage of GDP?

    • 45%
    • 4.5%
    • 22.5%
    • 55%

  6. Which type of public spending is most likely to increase long-run economic productivity?

    • Transfer payments
    • Debt interest payments
    • Unemployment benefits
    • Infrastructure investment

  7. What financial effect does high government borrowing typically have that causes crowding out?

    • Higher interest rates
    • Lower interest rates
    • Higher tax revenue
    • Lower inflation

  8. Why does sustained high public expenditure relative to GDP usually require high taxation?

    • To increase inflation
    • To finance spending
    • To boost imports
    • To reduce exports

  9. Which type of public spending directly reduces income inequality?

    • Debt interest payments
    • Infrastructure investment
    • Means-tested benefits
    • Defence spending

  10. How can increased public spending on healthcare directly improve living standards?

    • Reduced labour mobility
    • Better quality care
    • Lower life expectancy
    • Higher import tariffs

  11. Public spending rises from £400bn to £500bn, with GDP unchanged at £2,000bn. What is the percentage point rise?

    • 10 percentage points
    • 25 percentage points
    • 5 percentage points
    • 20 percentage points

  12. Which item is classified as public spending on goods and services rather than a transfer payment?

    • NHS nurse salaries
    • State pensions
    • Jobseeker's Allowance
    • Child Benefit

  13. Which item is an example of public capital expenditure in education?

    • Teacher salaries
    • Electricity bills
    • Building new schools
    • School stationery

  14. Why do state transfer payments automatically increase during an economic recession?

    • Rising unemployment claims
    • Falling tax rates
    • Declining national debt
    • Rising capital spending

  15. What describes a change in the composition of public expenditure?

    • Increasing total taxation
    • Raising total GDP
    • Reallocating spending priorities
    • Expanding money supply

  16. Public spending is £350bn and total GDP is £1,000bn. What is public expenditure as a percentage of GDP?

    • 65%
    • 28%
    • 3.5%
    • 35%

  17. Why is comparing public spending as a share of GDP across countries difficult?

    • Uniform currency values
    • Fixed exchange rates
    • Differing state roles
    • Identical tax systems

  18. Why might high spending on national debt interest hinder long-run economic growth?

    • Lower interest rates
    • Higher productivity
    • Increased capital stock
    • High opportunity cost

  19. Why is financial crowding out more likely when an economy operates at full employment?

    • Deflationary pressure
    • Inelastic resource supply
    • High unemployment
    • Excess spare capacity

  20. Which item is classified as government current expenditure?

    • Departmental utility bills
    • Buying railway land
    • Constructing hospitals
    • Building new motorways

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