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प्रश्न
A large amount of fiscal deficit proves to be counter productive. Give any two reasons in support of this statement.
उत्तर
A large fiscal deficit occurs when the government's spending exceeds its revenues. This can be counter productive for two reasons:
- Increased Borrowing and Interest Rates: Governments typically borrow money to cover fiscal deficits, which can cause interest rates to rise. Investors face higher borrowing costs as interest rates rise. This results in a crowding-out effect that stifles economic growth as private sector spending falls in reaction to increasing borrowing costs.
- Future Tax Burden and Inflation: To repay debt, the government may need to raise taxes in the future, placing a burden on future generations. If the government chooses to finance the deficit by printing additional money, it may cause inflation, impeding future growth.
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संबंधित प्रश्न
Fiscal deficit equals :
(a) Interest payments
(b) Borrowings
(c) Interest payments less borrowing
(d) Borrowing less interest payments
State the relation between marginal revenue and average revenue.
‘The fiscal deficit gives the borrowing requirement of the government’. Elucidate.
Give the relationship between the revenue deficit and the fiscal deficit.
Consider an economy described by the following functions:- C = 20 + 0.80Y, I = 30, G = 50, TR = 100 (a) Find the equilibrium level of income and the autonomous expenditure multiplier in the model. (b) If government expenditure increases by 30, what is the impact on equilibrium income? (c) If a lump-sum tax of 30 is added to pay for the increase in government purchases, how will equilibrium income change?
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.
Explain why the tax multiplier is smaller in absolute value than the government expenditure multiplier.
Discuss the issue of deficit reduction.
| 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 |
Which of the following is MOST LIKELY to be the main contributor to the fiscal deficit in this case?
A fiscal deficit is equal to borrowings. It is ______
When the revenue receipts are less than the revenue expenditures in a government budget, this shortfall is termed as
What is relation between government deficit and government debt?
Which of the following transactions are correct about ORT?
Which of the following points are related to the current alarm?
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 |
Primary deficit is borrowing requirements of government for making:
Fiscal Deficit equals:
Fiscal deficit equals:
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 |
