1.

Explain briefly fiscal deficit.

Answer»

Fiscal deficit:

  • When a government’s total expenditures exceed the revenue that it generates, excluding money from borrowings, it gives rise to,fiscal deficit.
  • Thus, Fiscal deficit = Total expenditure – Total income (excluding market borrowings).
  • The borrowings that a government does from the market are considered as income on the capital account. In fact this borrowing is a debt created by the government and must not be included as a source of income.


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