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Syllabus: Types of government expenditure

Syllabus: Explain that government spending can be classified into current expenditures, capital expenditures and transfer payments, providing examples of each.

So government spending or government expenditure is often divided into three main types:

  • Current Expenditures or Government final consumption expenditure on goods and services for current use to directly satisfy individual or collective needs of the members of the community.Capital Expenditure or Gross
  •  Capital Expenditures or fixed capital formation (or government investment) - government spending on goods and services intended to create future benefits, such as infrastructure investment in transport (roads, rail airports), health (water collection and distribution, sewage systems, communication (telephone, radio and tv) and research spending (defence, space, genetics) .
  • Transfer payments - spending that does not involve transactions of goods and services, but instead represent transfers of money, such as social security payments, pensions and unemployment benefit.


Task (1) - types of government expenditure (UK)

Complete the table below with an example of each type of government spending.

Government spending types Example
Social protection
Personal social services
Industry Agriculture, and Employment
Housing and environment
Public order and safety
Debt interest
Recreation, culture and religion
Public sector pensions


Task (2) - types of government expenditure (other country)

Build an equivalent table to that in Task (1) for your own country.