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प्रश्न
Answer the following question.
In the given figure, what does the gap 'KT' represent? State any two fiscal measures to correct the situation.
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उत्तर
The gap 'KT' represents the inflationary gap. This is the situation of excess demand.
Fiscal policy refers to the policy that is undertaken by the government to influence the economy through the process of its expenditure and taxation.
The fiscal measures to correct the excess demand are given as follows:
- Government Expenditure: The Government of a country incurs various types of expenditure to enhance the welfare of the people and also to facilitate economic growth and development.
In case of excess demand, the government cuts down its expenditures in the form of disinvestment. This lowers the level of economic activity, which in turn, reduces the level of employment, thereby reducing the income level. This subsequently reduces the aggregate demand, thus, the situation of excess demand gets corrected. - Public Borrowings: Through the measure of public borrowings, the government affects the liquidity (cash balances) held by the public. It is because of the excess liquidity, the people demand more and vice-versa. Therefore, the government affects the liquidity balances with the help of public borrowings.
In the case of excess demand, the government raises public borrowings, which reduces the liquidity balances with the public. A reduction in the liquidity lowers the purchasing power of the people, which in turn, lowers the aggregate demand.
संबंधित प्रश्न
Distinguish between revenue deficit and fiscal deficit.
Explain 'Revenue Deficit in a Government budget? What does it indicate?
Define revenue
Consider an economy described by the following functions:- C = 20 + 0.80Y, I = 30, G = 50, TR = 100, calculate the effect on output of a 10 per cent increase in transfers, and a 10 per cent increase in lump-sum taxes. Compare the effects of the two.
Suppose marginal propensity to consume is 0.75 and there is a 20 per cent proportional income tax. Find the change in equilibrium income for the following (a) Government purchases increase by 20 (b) Transfers decrease by 20.
What do you understand by G.S.T?
Classify the following statement into positive economic or normative economic, with suitable reason:
Government should try to control the rising fiscal deficit.
Suppose you are a member of the "Advisory Committee to the Finance Minister of India". The Finance Minister is concerned about the rising Revenue Deficit in the budget.
Suggest anyone measure to control the rising Revenue Deficit of the government.
The primary deficit in a government budget is ______.
Which of the following statement is true?
Read the following statements carefully and choose the correct alternatives given below:
Statement 1: Fiscal Deficit = Total Budget Expenditure - Total Budget Receipts (Net of borrowing)
Statement 2: Primary Deficit = Fiscal Deficit + Interest Payments.
When the revenue receipts are less than the revenue expenditures in a government budget, this shortfall is termed as
______ in the budget is an important measure of deficit.
What is relation between government deficit and government debt?
______ are the transactions between the residents of two countries that take place due to consideration of profit.
______ are those transactions that are undertaken to cover deficit or surplus in autonomous transactions.
Primary deficit is borrowing requirements of government for making:
Identify which of the following statements is true.
On the basis of the given information, calculate the value of:
- Fiscal deficit
- Primary deficit
| S.No. | Items | 2021-22 (₹ in crore) |
| (i) | Revenue Receipts | 20 |
| (ii) | Capital Expenditure | 15 |
| (iii) | Revenue Deficit | 10 |
| (iv) | Non-debt creating capital receipts | 50% of revenue receipts |
| (v) | Interest Payments | 4 |
