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a) Resources. In the long run, public expenditure cannot exceed the resources of a country.
) Taxable capacity. This imposes a ceiling on the government's revenue from taxation and thereby on an increase in public expenditure that is financed out of it.
c) Limit to borrowing. For a time public expenditure can outstrip revenue either as a matter of necessity or of fiscal policy and the deficit can be financed out of loans. But there is a limit to how much money lenders at home and abroad will be prepared lo make available to any government.
d) Public opinion. The final major restraint is the growth of public opinion. The level of public expenditure in a democratic society will depend on the size of the public sector that people want and are willing to pay for through taxation.
NatalieR answered the question on June 21, 2022 at 10:08
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