1. Use the data in the table below to calculate the following: the rate of growt
ID: 1152242 • Letter: 1
Question
1. Use the data in the table below to calculate the following: the rate of growth in total government expenditure, in real government spending, and in real per capita spending over the period from 2000 to 2009. What do the data tell you about the growth in government spending relative to population growth in Canada over this nine year period? Based on the data for the period 2000 to 2009, would you argue that the size of government has increased or decreased over this period? Explain. (5 marks) a) b) Local, Provincial, and Federal Government Expenditures, Selected Years Total Expenditures (S millions) 2002 Dollars (S millions) In 2002 S Per Capita 947 1,131 1,968 2,223 3,562 6,670 10,266 14,100 14,457 16,098 Percentage of GDP Year 1926 1930 1940 1950 1960 1970 1980 1990 2000 2009 704 871 1,588 3,583 9,869 30,439 126,348 321,802 433,904 643,883 8,312 13.1 14.5 22.7 18.7 11,548 22,395 30,540 63,790 142,238 251,689 390,536 443,665 514,989 25.0 33.8 40.2 47.3 40.3 42.2 Sources (for 1926 to 1960) Statistics Canada, Canadian Economic Observer, Historical Statistical Supplement, 1995/96, Cat. No. 11-210-XPB (Ottawa, July 1996); (for 1970 to 2009) Statistics Canada, Canadian Economic Observer, Historical Statistical Supplement, 2009/10, Cat. No. 11-210-XPB (Ottawa. August 2010).Explanation / Answer
The following formulas are used to calculate the required -
Growth rate in total government expenditure from 2000 to 2009 = ( (expenditure in 2009 - expenditure in 2000) / expenditure in 2000 ) * 100
Growth rate in total government expenditure from 2000 to 2009 = ((643,883-433,904)/433904)*100 = 48.39%
Growth rate in real expenditure = ( (2002 dollars expenditure in 2009 - 2002 dollars expenditure in 2000) / 2002 dollars expenditure in 2000 ) * 100 = ((514989-443665)/443665)*100 = 16.07%
Growth rate in real per capita spending = (2002 dollars per capita expenditure in 2009 - 2002 dollars per capita expenditure in 2000) / 2002 dollars per capita expenditure in 2000 ) * 100 = ((16098-14457)/14457)*100 = 11.35%
a) Over this nine year period the per capita spending of government has increased but not with good percentage in real terms.
b) The size of government has increased no doubtely but if measured in real terms then this growth is not much. Ignoring inflation only 16% the size has increased over this period of nine years.
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