Government Budget and the Economy (CBSE Class-12 Economics): Questions 20 - 28 of 31

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Question number: 20

» Government Budget and the Economy » Measures of Government Deficit

Appeared in Year: 2006

Short Answer Question▾

Write in Short

In a government budget, revenue deficit is Rs. 50, 000 crores and borrowings are Rs. 75, 000 crores. How much is the fiscal deficit?

Question number: 21

» Government Budget and the Economy » Government Budget

Essay Question▾

Describe in Detail

Distinguish between Balanced budget and surplus budget

Explanation

Distinguish between Balanced budget and surplus budget

In detail explain distinguish between Balanced budget and surplus budget

characteristics

Balanced budget

surplus budget

Definition

Balanced budget imply that current revenue and current expenditure both are equal.

Surplus budget is when tax revenue is greater than government spending.

Formula

Balance budget =… (76 more words) …

Question number: 22

» Government Budget and the Economy » Government Budget

Essay Question▾

Describe in Detail

A consumer consumes only two goods. Why is the consumer in equilibrium when he buys only that combination of the two goods that is shown at the point of tangency of the budget line with an indifference curve? Explain.

Explanation

the consumer in equilibrium

The Consumer in Equilibrium

the consumer in equilibrium in thi figure

Above diagram is process of consumer’s equilibrium. Assume the two goods be X and Y as shown in the diagram. The tangency is at point E Slope of indifference curve = Slope of budget line.

The equilibrium purchase is… (82 more words) …

Question number: 23

» Government Budget and the Economy » Classification of Expenditure

Essay Question▾

Describe in Detail

Distinguish between ‘revenue expenditure’ and ‘capital expenditure’. Give two examples of

Explanation

Distinguish between revenue expenditure and capital expenditure

Distinguish between revenue expenditure and capital expenditure in detail

Characteristics

Revenue expenditure

Capital expenditure

Definition

An expenditure which neither creates assets nor reduces liability

Capital expenditure which either creates an asset or reduces liability

How we get this?

It is obtained for normal… (76 more words) …

Question number: 24

» Government Budget and the Economy » Government Budget

Short Answer Question▾

Write in Short

State any one objective of government budget.

Question number: 25

» Government Budget and the Economy » Measures of Government Deficit

Essay Question▾

Describe in Detail

What is ’fiscal deficit? What are its implications?

Explanation

Fiscal deficit is defined as excess of total expenditure and total receipts excluding borrowings.

Its formula is Fiscal Deficit = Total Expenditure – Total Receipts other then borrowing and other liabilities.

The implications of fiscal deficits are: -

(1) Causes inflation

(2) Growing indebtedness

(3) Reduces future growth and development… (15 more words) …

Question number: 26

» Government Budget and the Economy » Government Budget

Essay Question▾

Describe in Detail

While calculating national income of India from its domestic factor income, how will you treat the following? Give reasons for your answer.

(i) Salaries received by Indians working in branches of foreign banks in India.

(ii) Profits earned by an Indian Bank from its branches abroad.

(iii) Rent paid by embassy of Japan in India to an Indian resident.

Explanation

(i) Salaries received by Indians working in branches of foreign banks in India is part of net factor income from abroad because these employees are normal residents of India working in foreign establishments. So, this is added to domestic factor income to get national income.

(ii) Profits earned by an… (61 more words) …

Question number: 27

» Government Budget and the Economy » Government Budget

Essay Question▾

Describe in Detail

Explain the circular flow of income.

Explanation

Various sectors like households, firms, government and foreign sectors work. These sectors function with mutual understanding. There is flow of expenditure and income and that of goods and services from these sectors.

Circular flow in a two sector model

Circular Flow in a Two Sector Model

This image of Circular flow in a two sector model

In… (55 more words) …

Question number: 28

» Government Budget and the Economy » Government Budget

Essay Question▾

Describe in Detail

How can a government budget help in reallocation of resource in an economy? Explain.

Explanation

T he government of a country directs the allocation of resources in a manner that there is a balance between the goals of profit maximization and social welfare. Production of goods which are harmful for health are charged heavy taxation and production of socially useful goods are provided with subsidy.

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