• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Goverment spending. How and why the Government spends and how this might affect Tescos.

Extracts from this document...


Nanaesi Wright Unit 39 The Government is the biggest spender in the economy. Money is spent in the Public, Private and Voluntary sector. The government spends money on different things needed for the economy to ensure that standards of living in the country remain high and avoids the country from going down during recession. In a return the government receive money from taxes such as VAT, NI Tax, Income tax etc which is from the general public. This chart shows the different things that the government spend on. When the government spends money in the public sector it indirectly spends money in the private sector as workers from the private sector will be hired and paid for the work done. This is done as they need specialist skills that are essential for the work for example building a school. Contractors will be needed for any construction work that will be needed. Deficit Funding - This is when the government expenditure is higher than what they receive. Government spending is so important in an economy that they are sometimes forced to borrow money when they don't have enough due to overspending. To improve standards of living and to avoid the country going into a recession Deficits are funded by borrowing money from banks. ...read more.


and spend (money goes around in the economy) * The equipments they may need for this job role is computers, telephones, stationary and a working area. When people become homeless, they are offered temporary accommodation which is all paid for by the government, form electricity, gas, food etc. With the help form the government there will be a reduction of self harm and alcohol or drug related sicknesses which will later on be a burden on the NHS, so helping these people can also be seen as an advantage as it stops them from getting ill and ending up in hospitals which are also paid for by the government. * Multiplier effect: This is the number of times that additional government spending on the economy re-spent and the resulting overall increase in spending (Dooley et al page 270) Leakages - This is the savings and taxes that are paid in order to reduce the effects of the multiplier, increasing the economy. The multiplier effect will lead to Aggregate demand (AD) which is the total demand. Aggregate Demand - This is the total amount of demand for goods and products in the economy. The more money spent in an economy, the more Aggregate demand increase. The multiplier effects occur because of investments in the economy. ...read more.


If Tesco's business is not running at the best of their ability due to less customers or less money, then investors will not invest their money in shares in the business. Overall government spending helps my chosen business as it helps them stay afloat and keeps their business running because it spends money in the private sector without realising. * The government shortage would have a multiplier effect on the economy which would then impact on Tesco's: 1. Foremost of all, the government invests money in the defensive side of the country (police). 2. Out of the money invested, the police force then decides to donate some to building shelters for the homeless (voluntary) and also purchase various items such as batons, shields, etc. The police workers then decide to buy some food items from Tesco's (private). 3. Out of the money invested in they then decide to pay the police workers. The workers and business are then taxed; the taxes received are classified as a leakage. Conclusion: The multiplier effect came into action from when the government invested money in the country's police force. The police force then had to go and buy more gear from the private sector, as well as investing money in Tesco's ( buying there products). The government gains back some of the money invested through taxes (income tax, corporation tax, etc). ?? ?? ?? ?? 1 ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. Retailing In India - A Government Policy Perspective

    This is very different from the experience of other countries. For instance, in Bangkok, where large retail developments have come up in the suburbs (due to lack of affordable land in the city), the government and private developers have jointly developed the necessary infrastructure.

  2. Case Study: The Home Depot

    Including, for example, Hechinger, BMC and Hughes Supply Since 1997 the trend became that the two biggest competitors(Home Depot and Lowe's) became stronger while small local competitors where slowly disappearing from the market. This is Especially true for the 'Do-it-yourself' segment of the building retail market.Which was growing in importance quite rapidly.

  1. Free essay

    Do high house prices in Trafford deter key public sector workers from seeking a ...

    This means that a change in price will not change supply by much. This is shown on the diagram. If the demand decreases from D1 to D2, the price decreases from P1 to P2. However because of the inelasticity of supply, there is only a small decrease in supply and demand, from Q1 to Q2.

  2. how the changes of the working environment affect employee relations

    They are similar to a national government but the biggest difference is that the local government will only have the power to influence their area.

  1. Should the government increase spending to get out of a recession?

    There are three main ways the government makes its money, discussed below7: * Taxes (indirect and direct), levied on income and consumption (e.g. VAT and excise duty), * Borrowing from other governments, * Printing more money - coined 'quantitative easing'.

  2. Liberalization: where it has lead us and where it is headed

    companies being funded that shouldn't have been funded and deals being done that shouldn't have been done. The result has been bad for the Indian taxpayers, who have shouldered the loss when the deals turned sour, and bad for the entrepreneurs, whose ventures have not been disciplined by competition for capital in the free markets.

  1. Scarcity and Unlimited Wants.

    Only a public limited company can advertise its prospectus. Each share allows one vote and pays one dividend (profit payment). Each year the shareholders elect a chairman and a board of directors who control the everyday running of the firm.

  2. The Famous Grouse - company profile and exports

    In recent years, the government has sought to address longstanding Maori grievances. Economy Over the past 20 years the government has transformed New Zealand from an agrarian economy dependent on concessionary British market access to a more industrialized, free market economy that can compete globally.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work