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प्रश्न
Consider an economy described by the following functions:- C = 20 + 0.80Y, I = 30, G = 50, TR = 100, calculate the effect on output of a 10 per cent increase in transfers, and a 10 per cent increase in lump-sum taxes. Compare the effects of the two.
उत्तर
MPC = 0.80
`barC` = 20
I = 30
G = 50
TR = 100
ΔTR = 10
Equilibrium level of income `=1/(1-c)[barC+cTR+I+G+DeltaTR]`
`=1/(1-0.80)[20+0.80xx100+30+50+0.80xx10]`
`=188/0.20xx100="Rs." 940`
Change in income = 940 − 900 = Rs 40
Increase in lump-sum tax ΔT =10
Change in Income `=DeltaT(-c)/(1-c)`
`=-10xx0.80/0.20`
= -10 × 4
=-40
From the above results, we can conclude that increase of 10 percent in transfers will raise the income by 40%.
And, increase of 10% in tax will lead to a fall in the income by 40%.
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संबंधित प्रश्न
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(a) Interest payments
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Explain why the tax multiplier is smaller in absolute value than the government expenditure multiplier.
Explain the relation between government deficit and government debt.
Does public debt impose a burden? Explain.
Discuss the issue of deficit reduction.
What do you understand by G.S.T?
Classify the following statement into positive economic or normative economic, with suitable reason:
Government should try to control the rising fiscal deficit.
| S. No. | Content | Rs (in crores) |
| 1. | Revenue Expenditure | 100 |
| 2. | Capital Receipts | 40 |
| 3. | Net Borrowings | 38 |
| 4. | Net Interest Payments | 27 |
| 5. | Tax Revenue | 50 |
| 6. | Non-tax Revenue | 15 |
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Assertion (A): Fiscal deficit is measured in terms of borrowings.
Reason (R): External borrowings increases the Fiscal deficit.
______ in the budget is an important measure of deficit.
Which of the following transactions are correct about ORT?
Identify the correctly matched pair of the items in Column A to those in Column B:
| Column A | Column B | ||
| 1 | Fiscal Deficit | (a) | Other than interest payments |
| 2 | Primary Deficit | (b) | Borrowings less interest payments |
| 3 | Revenue Deficit | (c) | Borrowings |
| 4 | Tax Deficit | (d) | Borrowings in government budget |
Fiscal Deficit equals:
Fiscal deficit equals:
Identify which of the following statements is true.
On the basis of the given information, calculate the value of:
- Fiscal deficit
- Primary deficit
| S.No. | Items | 2021-22 (₹ in crore) |
| (i) | Revenue Receipts | 20 |
| (ii) | Capital Expenditure | 15 |
| (iii) | Revenue Deficit | 10 |
| (iv) | Non-debt creating capital receipts | 50% of revenue receipts |
| (v) | Interest Payments | 4 |
