The Government: Budget and the Economy Test - 34

Capital receipts refers to those money receipts of the government which either create a liability for the government or cause a reduction in the assets.

For future prosperity, emerging nations must spend more on infrastructure as well as administration. As a result, the government’s total expenditures will always be more than its total earnings.

There are two components of government revenue. They are revenue receipts and capital receipts. Revenue receipts are classified as tax receipts and non tax receipts.

The difference between interest payments and fiscal deficit constitutes the primary deficit. Interest payments represent the cost of servicing debt, while the fiscal deficit indicates the overall gap between government expenditure and revenue, excluding interest payments. Therefore, the difference between interest payments and fiscal deficit reflects the primary deficit, making option D the correct answer.

The government budget’s goals are as follows: 1) maximise resource allocation, 2) minimize income inequalities, and 3) maintain economic stability

Revenue receipts of the government may be defined as those money receipts which neither creates a liabilty nor reduces the assets of the government.

GST comes under indirect taxes since the cost and liability are spread among several people.

The major source of revenue receipts fo the government is tax receipts.

Transfer payment is a revenue expenditure since it neither creates any assets for the govt nor reduces any liability.

Deficit budget is a budget in which the government revenues raised by the government falls short of the government expenditure.
Deficit budget = estimated government revenue < estimated government expenditure.