Public Finance

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Running Head: SPENDING REVIEW Introduction
  The
 term
 spending
 refers
 to
 the
 expenditures
 that
 are
 made
 by
 any
 government.
  Here
 in
 this
 paper,
 we
 will
 be
 particularly
 focusing
 on
 the
 government
 spending
 or
  expenditures
 made
 by
 the
 government
 of
 Britain.
 Government
 spending
 or
  government
 expenditure
 takes
 into
 account
 all
 the
 investments
 and
 consumptions
  but
 does
 not
 includes
 transfer
 payments
 that
 are
 made
 by
 the
 state
 of
 the
 country.
  Government
 final
 consumption
 expenditure
 refers
 to
 the
 acquisitions
 of
 services
 of
  goods
 that
 are
 made
 by
 the
 government
 for
 utilizing
 them
 currently
 in
 order
 to
  satisfy
 the
 collective
 or
 individual
 needs
 of
 the
 community
 members
 while
 the
 term
  government
 investment
 or
 formation
 of
 gross
 fixed
 capital
 is
 classified
 as
  acquisitions
 of
 services
 and
 goods
 made
 by
 the
 government
 that
 are
 planned
 to
  benefit
 in
 the
 future
 such
 as
 the
 investment
 in
 the
 infrastructure
 or
 spending
  research.
 Transfer
 payments
 are
 those
 transactions
 in
 which
 the
 government
  expenditure
 which
 does
 not
 acquires
 the
 services
 and
 goods
 and
 only
 represents
 the
  transfer
 of
 the
 money
 such
 as
 the
 payment
 of
 social
 security.
 The
 two
 types
 of
  government
 spending
 that
 are
 gross
 capital
 formation
 and
 final
 consumption
  expenditure
 together
 make
 one
 major
 component
 of
 the
 gross
 domestic
 product
 of
  the
 country.
  Discussion
  Spending
 reviews
 were
 introduced
 in
 the
 year
 of
 1997
 by
 the
 chancellor
 of
 that
 time
  in
 the
 United
 Kingdom,
 Gordon
 Brown,
 who
 formulated
 budgets
 for
 every
  department
 of
 the
 government
 for
 the
 period
 of
 next
 four
 years.
 Before
 the
 year
 of
  1997,
 the
 framework
 of
 spending
 reviews
 was
 established
 on
 year
 by
 year
 basis
 that
  is
 only
 for
 one
 year.
 The
 core
 reason
 for
 making
 of
 spending
 review
 was
 to
 make
  long
 term
 plans
 easier
 to
 be
 managed.
 Spending
 review
 is
 considered
 to
 be
 the
 main
  tool
 of
 the
 government
 in
 order
 to
 decide
 how
 much
 amount
 of
 money
 is
 required
  for
 hospitals,
 schools
 and
 other
 public
 service
 departments.
 
 
  The
 governments
 Treasury
 department
 places
 the
 overall
 restriction
 for
 public
  spending.
 Later
 it
 distributes
 resources
 between
 various
 departments,
 which
 are
  according
 to
 the
 priorities
 of
 the
 government.
 These
 costs
 are
 known
 as
  Departmental
 Expenditure
 Limits
 (DELs).
 It
 then
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