Sandeep Garg Macroeconomics Class 12- Chapter 10: Government Budget and the Economy

Sandeep Garg Class 12 Macroeconomics Solutions Chapter 10: Government Budget and the Economy are explained by the expert Economic teachers from the latest edition of Sandeep Garg Macroeconomic Class 12 textbook solutions. We at BYJU’S provide Sandeep Garg economics class 12 Solutions to give comprehensive insight about the subject to the students. These insights help as a priceless benefit to students while completing their homework or while studying for their exams. There are numerous concepts in economics, but here we provide you the solutions from Government Budget and the Economy, which will be useful for the students to score well in the board exams.

Sandeep Garg Solutions Class 12 – Chapter 10 – Part B

Question 1

In a government budget, the revenue deficit is ₹ 35 crores. If revenue receipts are ₹70 crores and capital expenditure ₹120 crores, then how much is the revenue expenditure.

Solution:

Revenue Defici = Revenue Expenditure – Revenue Receipt

₹35 crores = Revenue Expenditure – ₹70 crores

Revenue Expenditure = ₹35 crores + 70 crores

= ₹105 crores

Question 2

The interest requirement as per the government budget during a year are ₹1,40,000 crores. If total borrowing requirements of the government are estimated at 2,70,000 crores, then how much is a primary deficit.

Solution:

Total borrowing requirements of the government are estimated at ₹ 2,70,000 crores. It means, Fiscal deficit = ₹ 2,70,000

Primary deficit = Fiscal Deficit – Interest Payment

Primary Deficit = ₹ 2,70,000 crores – ₹ 1,40,000 crores

= ₹ 1,30,000 crores.

Question 3

In a government budget, the primary deficit is ₹ 12,000 crores and interest payment is ₹ 7,000 crores. How much is the fiscal deficit?

Solution:

Primary deficit = Fiscal deficit – Interest payment

₹12,000 crores = Fiscal Deficit – ₹ 7,000 crores

Fiscal Deficit = ₹12,000 crores + ₹ 7,000 crores

= ₹ 19,000 crores

Question 4

As per the government budget, the interest payments are estimated at ₹ 10,000 crores, which is 40% of primary deficit. Calculated fiscal deficit?

Solution:

Let, Primary defict = x

₹10,000 crores = 40% of x = 0.40 x

x= ₹10,000 crores / 0.40 = ₹25,000 crores

Primary Deficit = Fiscal deficit – Interest payment

₹25,000 crores = Fiscal defict – ₹10,000 crores

Fiscal deficit = ₹25,000 crores + ₹10,000 crores

= ₹35,000 crores

Explore link: Excess Demand and Deficient Demand

Question 5

Find (a) Fiscal deficit and (b) Primary deficit from the following:

Particulars (₹in crores)
Revenue Expenditure

Borrowings

Revenue Receipt

Interest Payment

70,000

15,000

50,000

25% of Revenue Deficit

Solution:

Revenue deficit = Revenue expenditure – Revenue receipt

Revenue deficit = ₹70,000 crores – ₹50,000 crores = ₹20,000 crores

Interest payment = 25% of revenue deficit = ₹ 20,000 crores x \(\frac{25}{100}\) = ₹5,000 crores

  1. Fiscal deficit = Borrowings = ₹ 15,000 crores
  2. Primary deficit = Fiscal deficit – Interest payment

Primary deficit = ₹15,000 crores – 5,000 crores

= 10,000 crores

Question 6

From the following information, determine: (a) Capital Expenditure (b) Total Expenditure (c) Interest Payments

Particulars (₹in crores)
Fiscal Deficit

Revenue Deficit

Primary Deficit

Revenue Receipts

Non- debt Capital Receipts

12,000

9,000

5,000

6,000

10,000

Solution:

(a) Fiscal deficit= Revenue deficit + (Capital expenditure – Non-debt creating capital receipts)

₹12,000 crores= ₹9,000 + Capital expenditure- ₹10,000)

Capital expenditure= ₹12,000 crores – ₹9,000 crores + 10,000 crores

= ₹13,000 crores

(b) Total expenditure = Revenue expenditure + Capital expenditure

Revenue expenditure = Revenue defici + Revenue receipt

= ₹9,000 crores + ₹6,000 crores

= ₹15,000 crores

Total expenditure = Revenue expenditure + Capital expenditure

=₹15,000 crores + ₹13,000 crores

= ₹28,000 crores

(c) Primary deficit = Fiscal deficit – Interest payments

₹5,000 crores = ₹12,000 crores – Interest Payments

Interest Payments = ₹12,000 crores – ₹5,000 crores

= ₹7,000 crores

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