Government Spending
Expenditure by government on goods, services, wages, benefits, infrastructure.
Formula
Government Spending Multiplier effect: ΔY = (1 / MPS) × ΔG
Real World
The UK government's £37bn investment in HS2 railway infrastructure directly creates contracts for firms like Balfour Beatty and thousands of supply-chain jobs, stimulating broader economic demand.
Exam Focus
Distinguish between capital spending (long-term investment) and current spending (wages/benefits) — examiners reward this distinction.
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