Answer to Question #213527 in Macroeconomics for Ketso

Question

Critically discuss any three Macroeconomic and at least two Microeconomic reasons for growth in government expenditures

Answer 1

Macroeconomic reasons are:

• Price rise – higher price level compels the government to spend an increased amount on purchase of goods and services.
• Increase in public revenue – with the rise in public revenue government is bound to increase the public expenditure.
• Recession, which may be fixed with the increase in government spending.

Microeconomics reasons are:

• The need to support agricultural industry damaged with draft.
• Government supported industry faces losses, so the government spending increases to cover the loss.