Discussion
Concepts of displacement and concentration effect in public expenditure are attributed to
a. A.C. Pigou and J.K. Mehta
b. Alan T. Peacock and Jack Wiseman
c. Kenneth Arrow and Paul A. Samuelson
d. A.R. Prest and I.M.D. Little
Codes :
Answer: B
The displacement effect and the concentration effect in public expenditure are due to Alan T. Peacock and Jack Wiseman, who studied public spending in the United Kingdom. They held that in times of crisis such as war the public accept higher taxes, and when the crisis ends the spending does not fall back to its old level, which is the displacement effect, while the activity of the central government then grows, the concentration effect. So the code is 'b', option (B). Pigou, Mehta, Arrow, Samuelson, Prest and Little are not linked with these effects.
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