Blue Flower

Discuss the growth of government expenditure with the aid of Macro-economic models. Illustrate the appropriateness of each model with reference to the expenditure growth by the South African Government.

 

 

 

The student had to explain some of the following concepts and models and discuss their relevance to the government's growth in expenditure:

Marks were given for the approach followed by the student - for example did the learner introduce the topic and set the scene. Did the learner provide a structure in advance (www.aded.co.za/139)? Did the learner in the introduction also define the concept and explain government expenditure. One point that could be made is for example that government does not produce any value and before anything can be spent that it needs to be expropriated from the citizens in the form of taxes. Taxes that negatively effects growth since it shifts resources from the productive sector to possibly less productive uses. 

The following models should then have been discussed in some detail: Wagner's Law; Peacock and Wiseman's displacement effect, The Meltzer-Richard hypothesis, and then Musgrave and Rostow's stages of development approach. Learners could also have alluded to the recent data and negative correlations between government expenditure and economic growth eminating from the Frasier Foundation (www.freetheworld.com) and from the Heritage Foundation.

A skilled learner would then pull the data together into a concise summary and conclusion.