What is Fiscal deficit? • The Fiscal Deficit is the difference betwee
A. It occurs when a government’s total revenue exceeds the total expenditure excluding borrowing.
B. It is the difference between governments total receipts and its total expenditure including borrowings.
C. It occurs when a government’s total expenditure exceed the revenue that it generates, excluding money from borrowings.
D. No option is correct.
Right Answer is: C
SOLUTION
• The Fiscal Deficit is the difference between total expenditure & total receipts of government, excluding the receipts from borrowing.
• The formula for the Fiscal deficit is:
• Fiscal deficit = Total expenditure – Total receipts excluding borrowings
• It is an important economic indicator.
• It is a measure of how much the government needs to borrow from the market to meet its expenditure when it does not have adequate resources.