Public Expenditure — Economics STD 10 — Question

Significance (or Role) of Public Expenditure in Economic Development :
Public expenditure is important from the following angles :
1. Increase in Aggregate Demand : Public expenditure increases aggregate demand for goods and services which in turn raises the level of output. It generates income in the economy which creates more demand.
2. Redistribution of Income : Through its various expenditure programmes, the government can redistribute national income and reduce inequalities in the distribution of income.
3. Larger Employment Opportunities : Public expenditure on economic and social infrastructure provides larger employment opportunities and raises the productive capacity of the economy.