The Government: Budget and the Economy Test - 31

The option "increasing aggregate fiscal discipline problems" can be considered an exception to the consequences of the government budget on the nation's economy. While government budgets typically aim to enhance resource allocation, implement assistance programs, and improve access to basic goods, increasing aggregate fiscal discipline problems, such as excessive deficits or mismanagement, deviate from these intended outcomes, potentially leading to adverse economic effects. Therefore, option D accurately identifies an exception to the usual consequences of government budgets.

Revenue and capital budget are the two main components of budget. Under revenue budget, we have revenue receipts and revenue expenditure of the government.

Public expenditure is classified as capital and revenue expenditure. Revenue expenditure does not create assests or cause reduction in liabilities whereas capital expenditure leads to creation of assets or reduction in liabilities.

Revenue receipts are those that do not have an impact on liabilities or assets. External grants have no effect on the current asset and liability positions.

Government budget is an annual statement of the estimates of the governemnt receipts and government expenditure during the period of the financial year.

Income tax is a direct tax as it has to be paid by the person or firm on whom it is imposed . The burden of the tax cannot be shifted. 

Direct taxes are levied on individuals and companies by the country's supreme tax body. Direct taxes are directly paid by those on whom it is imposed. For instance, taxpayers directly pay income tax, property tax, tax on assets and gifts to the government.

Fiscal deficit reflects the total borrowings of the government during the financial year. Accumulated borrowings over the year reflect accumulated burden of national debt which is to be borne by the future generations.

In the economic dictionary, PPP stands for Public-Private Partnership.

Public-Private Partnership:

• It is a strategy of government and private collaboration.
• This arrangement is done for the public resources or programs with the private sector.
• Mostly used for large government projects handled by private initiatives on a contractual basis.
• This Public-Private Partnership module includes sectors such as infrastructure, health care, public transport, education, and service, etc.

Unbalanced budget is one when estimated revenues are not equal to the estimated expenditures. It may be a deficit or surplus budget. When estimated expenditure is greater than estimated revenues, it is a deficit budget and when estimated revenues are greater than estimated expenditure, then it is a surplus budget.