Advertisements
Advertisements
प्रश्न
Answer the following question.
In the given figure, what does the gap 'KT' represent? State any two fiscal measures to correct the situation.
Advertisements
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
Explain 'Revenue Deficit in a Government budget? What does it indicate?
‘The fiscal deficit gives the borrowing requirement of the government’. Elucidate.
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.
Are fiscal deficits inflationary?
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.
Fiscal deficit = ______.
The primary deficit in a government budget is ______.
| S. No. | Content | Rs (in crores) |
| 1. | Revenue Expenditure | 100 |
| 2. | Capital Receipts | 40 |
| 3. | Net Borrowings | 38 |
| 4. | Net Interest Payments | 27 |
| 5. | Tax Revenue | 50 |
| 6. | Non-tax Revenue | 15 |
Which of the following is MOST LIKELY to be the main contributor to the fiscal deficit in this case?
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?
Which of the following statements are correct
Statement 1: Fiscal deficits are not necessarily inflationary; though, they are generally regarded as inflationary.
Statement 2: When the government expenditure increases and tax reduces, there is a government deficit and there will be a corresponding increase in the aggregate demand.
Which of the following transactions are correct about ORT?
The shape of average revenue curve in monopoly is ______
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 |
A large amount of fiscal deficit proves to be counter productive. Give any two reasons in support of this statement.
