1. Section 1 The Economics of Government Spending Pork is a popular trend used by politicians to satisfy their constituents.Pork Taxpayers generally would not approve of projects otherwise. Spending that is intended to primarily benefit only those constituents of a politician in return for their political support.constituents politician

2. Section 1 Government Spending in Perspective (cont.) Spending by the public sector has increased sharply since the Great Depression.public sector –Change in public opinion gave government a larger role in daily economic affairs. –Massive government spending funded the U.S. involvement in World War II.

3. Section 1 Government Spending in Perspective (cont.) Some people question which goods and services government should provide versus what the private sector should provide.private sector Example: Who should pay for a new bridge to Canada? Who would it benefit?

4. Section 1 Government Spending in Perspective (cont.) Government makes two kinds of broad expenditures: –Purchase of goods and services Ex: Roads, Buildings, Equipment, Salaries –Transfer payment – Ex: Social Security, Unemployment, WelfareTransfer payment Grant-in-aid – Ex: intergovernmental transfersGrant-in-aid

5. Section 1 Government spending influences –Resource allocation—if government withdraws subsidies to farmers, resources become available to other industries.subsidies –Distribution of incomeDistribution of income –Production in the private sector –Tax burden increases Impact of Government Spending (cont.)