One way that the government influences the economy
Government spending on things like social services, health and education
Pumps money into the econo
Changes in government spending
Affect firms within the economy controlled by that government
Changing government expenditure on welfare benefits
Has a quick impact on the economy, because people who receive benefits will instantly have more (or less) money available to spend, which means that businesses may see demand for their products go up (or down)
Government spending on infrastructure such as roads
Has a slower effect on the economy. This spending can improve supply routes for businesses so that they can get things like raw materials faster and more cheaply. It can also increase customer access to businesses, so demand could increase