Governments Spending Money: Budgets

How do governments decide what to spend money on?
How do we know what areas the government should keep hold of, and where it should stay well out? It depends on who benefits from a good or service, how much it costs to set up and run, what the core incentive behind it is and who asked for it. We’ve all got our preconceived ideas of where government spending belongs and what should be left to the private sector, but it’s probably one of the things people disagree most about. Economics has some helpful tools for getting to the bottom of those debates.