Evaluate the likely economic effects of this planned increase in government expenditure.
In 2016 the UK Chancellor of the Exchequer announced that the government would spend an extra £23 billion on innovation and infrastructure over the following five years. Evaluate the likely economic effects of this planned increase in government expenditure. (June 2018)
Essay plan
- Intro
- P1 - this is an example of expansionary fiscal policy
- Diagram - AD right shift
- Evaluation - increased budget deficit
- P2 - this is also an example of supply-side policy
- Diagram - LRAS right shift
- Evaluation - opportunity cost and time lag