Question

The classification of public expenditure as productive and unproductive is based on:

• A. The immediate utility or benefit derived from the expenditure
• B. The total amount of money spent by the government
• C. Whether the expenditure is on essential services or discretionary items
• D. The impact of the expenditure on the economy's productive capacity

Answer 1

Answer:

D. The impact of the expenditure on the economy's productive capacity

• Productive expenditure, such as spending on infrastructure, education, and health, increases the economy's capacity to produce goods and services.

• Unproductive expenditure (like war expenses or interest payments) does not directly contribute to this capacity.