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 Class 12 Economics Solutions Sandeep Garg

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




Long Questions – Sandeep Garg Macroeconomics Class 12 Solutions Government budget and the Economy

Sandeep Garg Macroeconomics Class 12 Solutions

Part A: Introductory Macroeconomics
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