Class 12 Economics Solutions

Discuss the meaning of following deficits: (i) Revenue Deficit; (ii) Fiscal Deficit; and (iii) Primary Deficit.

Question 5. Discuss the meaning of following deficits: (i) Revenue Deficit; (ii) Fiscal Deficit; and (iii) Primary Deficit.
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.5 Discuss the meaning of following deficits: (i) Revenue Deficit; (ii) Fiscal Deficit; and (iii) Primary Deficit.

Solution:

Revenue deficit is a situation where governments revenue expenditure exceeds its revenue receipts. This implies government’s inability to meet its regular expenditure out of its regular income.
Revenue Deficit= Revenue expenditure- Revenue receipts

Fiscal deficit refers to a situation where Governments total expenditure is greater than its total receipts net of borrowings (excluding borrowings).
Fiscal Deficit= Total expenditure – Total revenue (net of borrowings)

Primary deficit refers to the excess of fiscal deficit over interest payments on borrowings by the government.
Primary Deficit= Fiscal deficit- interest payments

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Sandeep Garg Macroeconomics Solutions

Short Questions Solutions

  1. Explain Circular flow of income in two sector economy.
  2. What are the different phases of a circular flow of income.
  3. What is meant by circular flow of income? Distinguish between Real flow and Money flow.
  4. “Households and Firms depend on each other in the circular flow of income. Justify the statement in case of a two-sector model.
  5. Distinguish between Stock and Flow. Give an example of each.
  6. Discuss briefly, the circular flow of income in a two sector economy with the help of a suitable diagram.

Long Questions Solutions

  1. Briefly discuss the money flow and the real flow of income.
  2. Describe the circular flow of income in a two-sector economy (without financial market).
  1. Distinguish between Factor income and Transfer income.
  2. Distinguish between Final goods and Intermediate goods.
  3. Machine purchased is always a final good.” Do you agree?
  4. Which of the following expenditure are Intermediate or Final goods?
  5. Discuss the meaning of Consumption goods and Capital goods.
  6. Distinguish between Consumer goods and Capital goods.

Short Questions Solutions

  1. State three objectives of a government budget
  2. Explain objective of stability of prices of government budget
  3. How can a government budget help in reducing inequalities reducing inequalities of income? Explain.
  4. Explain the ‘allocation of resources’ objective of Government budget.
  5. What is a government budget? Name two sources each of non-tax revenue receipts and capital Receipts.
  6. What is a government budget? Give the meaning of: (a) Revenue deficit; (b) Fiscal deficit.
  7. What are the two broad divisions of receipts of the government budget? Name two sources of each kind of receipt.
  8. Define tax revenue. What are the two kinds of tax revenues? Give two examples of each.
  9. Distinguish between Direct Tax and Indirect Tax
  10. Explain with the help of suitable examples the basis of classifying taxes into direct and indirect taxes
  11. Distinguish between revenue receipts and capital receipts
  12. Give meanings of Capital receipts and Revenue receipts with an example of each.

Long Questions Solutions

  1. Define Government budget. Explain the various objectives of a government budget.
  2. What is meant by non-tax revenue? Explain the different sources of non-tax revenue
  3. What is meant by budget expenditure? Distinguish between revenue expenditure and capital expenditure.
  4. What is the meaning of revenue receipts? What are the two main sources of revenue receipts?
  5. Discuss the meaning of following deficits: (i) Revenue Deficit; (ii) Fiscal Deficit; and (iii) Primary Deficit.
  6. Distinguish between: (a) Direct Tax and Indirect tax (b) Primary deficit and Revenue deficit
  7. Distinguish between the following (a) Revenue receipts and Capital receipts (b) Revenue deficit and Fiscal deficit