Advertisements
Advertisements
Question
What is the difference between revenue expenditure and capital expenditure? Explain how taxes and government expenditure can be used to influence.
Solution
| Basis of Difference | Capital Expenditure | Revenue Expenditure |
| Meaning | This refers to that government expenditure, which causes reduction in the government liabilities as well as creates assets for the government. | This refers to the government expenditure which does not cause any reduction in government liabilities and also does not create assets for the government. |
| Examples | Expenditure on purchasing shares, bonds, etc. | Expenditure on salaries, pensions, subsidies, interest payments, etc. |
The government through its budgetary policy attempts to promote fair and right distribution of income in a society. This is done through taxation and expenditure policy. On one hand, through its taxation policy, the government taxes the higher income group and on the other hand, through the expenditure policy (subsidies, transfer payments, etc.), it transfers the purchasing power in the hands of the poor sections of society. With the help of these policies, the government aims at fair distribution of income in the society.
Note: The question is incomplete in the english version, however, on the basis of hindi version we have provided the solution. According to Hindi version the second part of the question is 'Explain how taxes and government expenditure can be used to influence income distribution in a society'.
APPEARS IN
RELATED QUESTIONS
What is revenue expenditure?
Is the following revenue expenditure or capital expenditure in the context of government budget? Give reason.
Expenditure on a collection of taxes.
Distinguish between revenue expenditure and capital expenditure in Government budget. Give an example of each.
Which one of these is a revenue expenditure?
Calculate investment expenditure from the following date about an economy which is in equilibrium :
National Income = 1000
Marginal propensity to save = 0.20
Autonomous consumption expenditure = 100
The government has started spending more on providing free services like education and health to the poor. Explain the economic value it reflects.
Answer the following question.
How are capital expenditure different from Revenue expenditure? Discuss briefly.
The Government of India has decided to vaccinate the adult population of India (with Covaxin/Covishield), without any charge. This would be categorized as ____________.
The expenditure multiplier is the ratio of ______.
Level of planned output coincides with planned expenditure when ______
Purchase of shares is related to ______
Measure the level of ex-ante aggregate demand when autonomous investment and consumption expenditure (1) is Rs 50 crores, MPS is 0.2 and the level of income (Y) is Rs 4000 crores.
The government uses ______ as proxy for income of households to identify the poor.
Read the following statements carefully and choose the correct alternatives given below:
Statement 1: Revenue Expenditure is expenditure incurred for purposes other than the creation of physical or financial assets of the central government.
Statement 2: Revenue Expenditure relates to those expenses incurred for the normal functioning of the government departments.
Subsidies and expenditure on scholarships are examples of ______
Which one of the following is not a capital expenditure?
‘Under the Ayushmaan Bharat Scheme, the Government provides free medicines to the economically backward section of the society’.
Identify and discuss the nature of the government expenditure indicated in the given statement.
