Question 3(Marks: 15)

'The belief that we can spend our way out of low growth is inconsistent with the best available empirical evidence and ignores South Africa's recent poor performance in using government spending as a tool to unlock muchneeded economic growth. Gambling with our future on risky economic strategies that have failed elsewhere is something we are not prepared to do.' Tito Mboweni is South Africa's Minister of Finance.

Tito Mboweni - Fin24

https://www.news24.com/fin24/opinion/titomboweniwecannotspendourwayoutoflow growth20200714 (copy and paste link for more information)

Q.3.1 Government spending (as a percentage of gross domestic expenditure) has increased significantly over the past decades. Explain any two reasons for this trend.

(Marks will be awarded for the quality of your paraphrasing, ) 6 marks

Q.3.2 The increased government spending noted in Q.3.1. above has to be financed in one way or another.Describe three ways in which government spending can be financed.

Marks will be awarded for your ability to integrate the theory into the extract above. 9 marks