Advertisements
Advertisements
प्रश्न
Are fiscal deficits inflationary?
Advertisements
उत्तर
Fiscal deficits are not necessarily inflationary; though, they are generally regarded as inflationary. When the government expenditure increases and tax reduces, there is a government deficit and there will be a corresponding increase in the aggregate demand. However, the firms might not be able to meet the growing demands, forcing the price to rise. Hence fiscal deficits are inflationary in this sense.
But on the other hand, initially if the resources are underutilised (due to insufficient demand) and output is below full employment level, then with the increase in government expenditure, more factor resources will be employed to cater to the increasing demand without exerting much pressure on price to rise. In this situation, a high fiscal deficit is accompanied by high demand, greater output level and lesser inflationary situation. Hence, whether the fiscal deficits are inflationary or not depends on how close is the original output level to the full employment level.
APPEARS IN
संबंधित प्रश्न
Define fiscal deficit.
‘The fiscal deficit gives the borrowing requirement of the government’. Elucidate.
Suppose that for a particular economy, investment is equal to 200, government purchases are 150, net taxes (that is lump-sum taxes minus transfers) is 100 and consumption is given by C = 100 + 0.75Y (a) What is the level of equilibrium income? (b) Calculate the value of the government expenditure multiplier and the tax multiplier. (c) If government expenditure increases by 200, find the change in equilibrium income.
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.
Does public debt impose a burden? Explain.
Discuss the issue of deficit reduction.
Classify the following statement into positive economic or normative economic, with suitable reason:
Government should try to control the rising fiscal deficit.
Regressive tax is that which is ______.
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?
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.
______ are those transactions that are undertaken to cover deficit or surplus in autonomous transactions.
Identify the correctly matched pair of the items in Column A to those in Column B:
| Column A | Column B | ||
| 1 | Fiscal Deficit | (a) | Other than interest payments |
| 2 | Primary Deficit | (b) | Borrowings less interest payments |
| 3 | Revenue Deficit | (c) | Borrowings |
| 4 | Tax Deficit | (d) | Borrowings in government budget |
Which of the following statements is true?
Primary deficit is borrowing requirements of government for making:
Fiscal Deficit equals:
Fiscal deficit equals:
Identify which of the following statements is true.
