Advertisements
Advertisements
Question
‘The fiscal deficit gives the borrowing requirement of the government’. Elucidate.
Advertisements
Solution
Fiscal deficit is the excess of total expenditure over total receipts.
That is, when total government expenditure is greater that total government receipts, the government faces fiscal deficit.
Fiscal deficit is estimated as:-
Total Expenditure (revenue + capital) − Total Receipts (excluding borrowings).
Fiscal deficit gives an indication to the government about the total borrowing requirements from all sources. Fiscal deficit can be financed through domestic borrowings and/or borrowings from abroad. Greater fiscal deficit implies greater borrowings by the government.
APPEARS IN
RELATED QUESTIONS
Define fiscal deficit.
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.
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.
Explain why the tax multiplier is smaller in absolute value than the government expenditure multiplier.
Are fiscal deficits inflationary?
What do you understand by G.S.T?
The primary deficit in a government budget is ______.
When the revenue receipts are less than the revenue expenditures in a government budget, this shortfall is termed as
Which of the following transactions are correct about ORT?
Which of the following points are related to the current alarm?
Which of the following statements is true?
How good is the system of G.S.T as compared to the old tax system?
A Budget Deficit refers to a situation where:
The three main measures of government deficit are:
The Fiscal Deficit measures:
Which of the following formulas correctly defines the Fiscal Deficit?
If Total Expenditure is ₹1,200 crore, Revenue Receipts are ₹800 crore and Non-Debt Creating Capital Receipts are ₹100 crore, the Fiscal Deficit equals:
Which of the following formulas correctly defines the Primary Deficit?
