Using terms from economics, explain why governments often have to choose between spending more money on the NHS or more money on education.


Economics terms are in bold…

Economically speaking, governments must make this choice because of scarcity.  There are unlimited wants (more funding for the heatlh service, more funding for the education system and more) while there are limited amounts of tax dollars (resources).  This dilemma can be seen as a production possibility curve.  The government has a finite amount of money to spend and every pound spent on the NHS is one that is not spent on education.  In other words, there is an opportunity cost for spending on one or the other.  The only way to increase spending on both is to achieve economic growth, which will lead to more tax revenues. 

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