| Question | 3. What is meant by budget expenditure? Distinguish between revenue expenditure and capital expenditure. |
| Class | Class 12 |
| Subject | Economics (Macroeconomics) |
| Category | Sandeep garg Macroeconomics Class 12 Solutions |
Sandeep Garg Macroeconomics Class 12 Solutions Circular flow of Income – Long Questions – Q.3 What is meant by budget expenditure? Distinguish between revenue expenditure and capital expenditure.
Solution:
Budget expenditure refers to the estimated expenditure of government during a financial/fiscal year.
| Basis | Revenue Expenditure | Capital Expenditure |
| Meaning | Revenue expenditure are those recurring expenditures of the Government which neither reduces its liabilities or creates an asset for the government. | Capital Expenditures are those non-recurring expenditures of the government which results in reduction of its liabilities or creation of an asset for the government. |
| Nature | It is recurring in nature | It is non-recurring in nature. |
| Example | Salary, interest etc. | Purchase of land, borrowings etc. |