Which item is normally recorded as a development expenditure in a government budget?
Correct answer: C. Construction of a new public hospital
- A. Interest paid on existing public debt
- B. Salaries of permanent civil servants
- C. Construction of a new public hospital
- D. Routine electricity bills of ministries
Explanation
Construction of a new public hospital creates or improves public capital and is therefore development expenditure. Salaries, interest, and routine operating bills are generally current expenditures.
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Government revenue and expenditure are analysed through taxation, public borrowing, budgets, subsidies, transfers and public debt. The topic explains how fiscal policy affects resource allocation, income distribution, economic stability and growth, while distinguishing direct from indirect taxes, progressive from regressive taxation, and public goods from goods supplied by private markets.
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