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Distinguish Between Revenue Expenditure and Capital Expenditure. - Economics

Distinguish Between

Distinguish between revenue expenditure and capital expenditure.

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Solution

Basis

Revenue expenditure

Capital expenditure

Creation of Assets

It does not create assets for the government.

It results in the creation of assets.

Reduction of Liability

These expenditures do not result in the reduction of liability.

These expenditures cause a reduction of the liability of the government.

Items

(a) Aids given to states and others

(b) Interest payments

(c) Expenditure on defence

(a) Purchase of shares

(b) Expenditure on land, building, etc.

(c) Grants by the central government to the state government

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APPEARS IN

NCERT Class 12 Economics - Introductory Macroeconomics
Chapter 5 Government Budget And The Economy
Exercise | Q 2 | Page 83
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