Impact of Government Spending on the Private Sector Essay - 86

Impact of Government Spending on the Private Sector - Essay Example According to the study the increase in in consumption expenditure by the government relatively results to an increase in investments. Notably, the optimum consumption expenditure is about 300000 unit price across the years in UK. In the same manner, the U.S. government expenditure acts the same as the one of the U.K. Evidently, the steady increase in expenditure by the government has lead increased investment by the private sector to an optimum of about 2700 unit cash. The difference arises by the fact that the U.K has consumes more in terms of cash than the U.S but the pattern is quite the same. From this discussion it is clear that   the graphs indicates that an increase in government need for more goods, leads to an increase in production of the same by the investors. Hereby, when the U.K government spends more products for its citizen, the private sector has to increase their production in an almost similar rate. Though not steady, the increased spending has in the years lead to the development of private sectors. Going by this fact, we can also note that the real U.S government expenditure acts the same way. However, the difference arises in that, the U.S government has a lesser consumption rate, the investment is relatively lesser compared to that of the U.K. In this manner we can conclude that the government spending on good positively affects the private industry. The government expenditure in terms of cash per gross domestic product in viewed in relation to the gross fixed capital per gross domestic product. By the look of the table, one can clearly notice that the re lacks a particularly distinct pattern to define the graph. Each year has a different value in relation to the two per GDP/s. the lesser the government spends per unit GDP, the lesser the physical assets produced by the investors.