Expenditure

An expenditure is an outflow of money to purchase goods or services. An expenditure represents a use of resources that has already occurred, or has been committed to, and therefore cannot be reversed. The term is most commonly used in reference to government spending or personal consumption.

Expenditures can be classified in a variety of ways, including by their function, timing, or economic classification. For instance, government expenditures on defense may be categorized as discretionary or mandatory spending, while personal expenditures on food may be categorized as necessary or discretionary. Similarly, government expenditures may be characterized as either capital or operating expenses, while personal expenditures may be categorized as either fixed or variable costs.

It is important to note that not all outflows of money represent an expenditure. For example, transfers of money from one individual to another are not typically considered expenditures (although they may be considered when evaluating the welfare effects of a particular policy). Additionally, some outflows of money may represent investments rather than expenditures. For instance, an individual who purchases shares of stock is making an investment rather than an expenditure.