| Question | 7. Distinguish between the following (a) Revenue receipts and Capital receipts (b) Revenue deficit and Fiscal deficit |
| Class | Class 12 |
| Subject | Economics (Macroeconomics) |
| Category | Class 12 Economics Solutions Sandeep Garg |
Sandeep Garg Macroeconomics Class 12 Solutions Circular flow of Income – Long Questions – Q.7 Distinguish between the following (a) Revenue receipts and Capital receipts (b) Revenue deficit and Fiscal deficit.
Solution:
(a) Revenue receipts and Capital receipts
| Basis | Revenue Receipts | Capital Receipts |
| Meaning | They neither create any liability nor reduces assets of the government. | They either create a liability or reduces assets of the government. |
| Nature | They are recurring in nature. | They are non-recurring in nature. |
| Example | Tax revenue, fines, interest etc. | Borrowings, sale of government property etc. |
(b) Revenue deficit and Fiscal deficit
| Basis | Fiscal Deficit | Revenue Deficit |
| Meaning | Fiscal deficit refers to a situation where Governments total expenditure is greater than its total receipts net of borrowings (excluding borrowings). | Revenue deficit is a situation where governments revenue expenditure exceeds its revenue receipts. |
| Implication | Fiscal deficit represents how much amount the government needs to borrow in order to finance its expenditures. | This implies government’s inability to meet its regular expenditure out of its regular income. |
Long Questions – Sandeep Garg Macroeconomics Class 12 Solutions Government budget and the Economy
- Define Government budget. Explain the various objectives of a government budget.
- What is meant by non-tax revenue? Explain the different sources of non-tax revenue
- What is meant by budget expenditure? Distinguish between revenue expenditure and capital expenditure.
- What is the meaning of revenue receipts? What are the two main sources of revenue receipts?
- Discuss the meaning of following deficits: (i) Revenue Deficit; (ii) Fiscal Deficit; and (iii) Primary Deficit.
- Distinguish between: (a) Direct Tax and Indirect tax (b) Primary deficit and Revenue deficit
- Distinguish between the following (a) Revenue receipts and Capital receipts (b) Revenue deficit and Fiscal deficit