Government Budget and the Economy Test - 1

Through its budgetary policies, the governemnt tries to reduce the inequalities in income and wealth. They can impose taxes on the rich and give subsidies to the poor so that income is redistributed among the poorer sections of the society.

Any receipt which creates liability for the govt is a capital receipt. For eg. loans/borrowings by the government are a liability as they have to be paid back.

Yes. Public expendiute can be both Plan and Non plan expenditure.  The expenditure relating to specific plans and programmes of developemnt is plan expenditure and non plan expenditure is not related to any specific plan or programme. Expenditure on defence and subsidies , salaries and pensions are example of non plan expenditure.

any expenditure by the govt that creates assets for the govt is a capital expenditure For eg. Expenditure on land and building, expenditure on machinery and equipment, purchase of shares etc.

It is a statement of the estimates of the government receipts and government expenditure during the period of a financial year.

The government frames its budgetary policy with a view to achieving a set of objectives.

When the govt repays its loans, it reduces the liability of the govt. So, repayment of loan is a capital expenditure.

Future generations inherit a laggard economy where GDP growth is low because a significant percentage of national income is used to pay the past debts.

Revenue expenditure is incurred in the normal functioning of the government. Revenue expenditure is recurring in nature. Its purpose is to keep the government machinery running. It does not create any asset.

Tax receipts is a major revenue for the government. Tax receipts can be income tax, Goods and services tax, gift tax, wealth tax etc. Tax is a compulsory payment to the government by the households, firms or other institutional units.