Year Tax revenue ($bn) Health spending ($bn) Flood-defence spending ($bn) 2024 58 43 9 2025 61 46 18 The table below gives part of the government budget for...
Question 1 Report
| Year | Tax revenue ($bn) | Health spending ($bn) | Flood-defence spending ($bn) |
|---|---|---|---|
| 2024 | 58 | 43 | 9 |
| 2025 | 61 | 46 | 18 |
The table below gives part of the government budget for the island economy of Selva. The government plans to borrow when its spending is greater than its tax revenue.
Table 1
(a) Calculate total government spending in 2025. [1]
(b) Which year has the larger budget deficit? [1]
(c) Explain one possible benefit of higher government spending on flood defences. [2]
Answer Details
(a) Total government spending in 2025 is health spending plus flood-defence spending:
\[\$46\text{ bn} + \$18\text{ bn} = \$64\text{ bn}\]
Total spending was $64 billion. [1]
(b) 2025 has the larger budget deficit. In 2025, spending is $64 billion while tax revenue is $61 billion, giving a deficit of $3 billion. In 2024, spending is $52 billion and revenue is $58 billion, so there is no deficit. [1]
(c) Spending on flood defences can prevent damage to homes, roads and firms’ capital, such as buildings and machinery. Less flood damage means less disruption and lower costs for firms, helping to protect output and employment. [2]
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