ECONOMICS
FISCAL POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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____ spending is greater than revenue.
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____ spending is less than revenue.
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____ the budget has been incorrectly calculated.
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____ revenue is greater than spending.
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Detailed explanation-1: -The formula for calculating fiscal deficit is as follows: Fiscal deficit = Total expenditures – Total receipts excluding borrowings.
Detailed explanation-2: -The fiscal deficit is the difference between the total revenue and total expenditure of the government. Revenue deficit hence arises when the government’s actual net receipts is lower than the projected receipts. So, the size of fiscal deficit is always higher than revenue deficit.
Detailed explanation-3: -Budget deficit definition economics A budget deficit in economics is when the government’s tax revenues are less than its spending for a particular year. In contrast, a budget surplus occurs when the government’s tax revenues are greater than its spending for a particular year.
Detailed explanation-4: -When the government incurs more public expenditure for governmental projects then its expenditure exceeds its revenue, and this is called deficit budget. Q. When government revenue exceeds government expenditure, it is known as budget. Q.