Government expenditure (G)

• What is the trade cycle?

  The fluctuations in GDP around the long-run trend in economic growth
• What happens to the level of government expenditure during a recession?

  It increases, as they need to spend more on out-of-work benefits
• What happens to the level of government spending during a growth?

  It decreases, as they don't need to spend as much on out-of-work benefits
• What is fiscal policy?

  The government's use of taxation and expenditure to influence the total spending in the economy