Distinguish between the following (a) Revenue receipts and Capital receipts (b) Revenue deficit and Fiscal deficit

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

Sandeep Garg Macroeconomics Class 12 Solutions

Part A: Introductory Macroeconomics
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