Sandeep Garg Class 12 Macroeconomics Solutions Chapter 10: Government Budget and the Economy are explained by the expert economics teachers from the latest edition of Sandeep Garg Macroeconomics Class 12 textbook solutions.
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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 â‚¹35 crores. If the revenue receipts are â‚¹70 crores and capital expenditure is â‚¹120 crores, then how much is the revenue expenditure?
Solution:
Revenue deficit = Revenue expenditure â€“ Revenue receipt
â‚¹35 crores = Revenue expenditure â€“ â‚¹70 crores
Revenue Expenditure = â‚¹35 crores + â‚¹70 crores
= â‚¹105 crores
Question 2
The interest requirement as per the government budget during a year is â‚¹1,40,000 crores. If the total borrowing requirements of the government are estimated at â‚¹2,70,000 crores, then how much is the primary deficit?
Solution:
Total borrowing requirements of the government are estimated at â‚¹2,70,000 crores. It means,
Fiscal deficit = â‚¹2,70,000
Primary deficit = Fiscal deficit â€“ Interest payment
Primary deficit = â‚¹2,70,000 crores â€“ â‚¹1,40,000 crores
= â‚¹1,30,000 crores
Question 3
In a government budget, the primary deficit is â‚¹12,000 crores and interest payment is â‚¹7,000 crores. How much is the fiscal deficit?
Solution:
Primary deficit = Fiscal deficit â€“ Interest payment
â‚¹12,000 crores = Fiscal deficit â€“ â‚¹7,000 crores
Fiscal deficit = â‚¹12,000 crores + â‚¹7,000 crores
= â‚¹19,000 crores
Question 4
As per the government budget, the interest payments are estimated at â‚¹10,000 crores, which is 40% of the primary deficit. Calculated the fiscal deficit.
Solution:
Let primary deficit = x
â‚¹10,000 crores = 40% of x = 0.40 x
x= â‚¹10,000 crores/0.40 = â‚¹25,000 crores
Primary deficit = Fiscal deficit â€“ Interest payment
â‚¹25,000 crores = Fiscal deficit â€“ â‚¹10,000 crores
Fiscal deficit = â‚¹25,000 crores + â‚¹10,000 crores
= â‚¹35,000 crores
Explore link: Excess Demand and Deficient Demand
Question 5
From the given table, Find the following:
(a) Fiscal deficit
(b) Primary deficit
Particulars | (â‚¹ in crores) |
Revenue expenditure
Borrowings Revenue receipt Interest payment |
70,000
15,000 50,000 25% of revenue deficit |
Solution:
Revenue deficit = Revenue expenditure â€“ Revenue receipt
Revenue deficit = â‚¹70,000 crores â€“ â‚¹50,000 crores = â‚¹20,000 crores
Interest payment = 25% of revenue deficit = â‚¹20,000 crores x 25/100[1]Â
= â‚¹5,000 crores
- Fiscal deficit = Borrowings = â‚¹15,000 crores
- Primary deficit = Fiscal deficit â€“ Interest payment
Primary deficit = â‚¹15,000 crores â€“ â‚¹5,000 crores
= â‚¹10,000 crores
Question 6
From the given information, determine the following:
(a) Capital expenditure
(b) Total expenditure
(c) Interest payments
Particulars | (â‚¹ 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 â€“ Non-debt creating capital receipts)
â‚¹12,000 crores = â‚¹9,000 + (Capital expenditure – â‚¹10,000
Capital expenditure = â‚¹12,000 crores â€“ â‚¹9,000 crores + â‚¹10,000 crores
= â‚¹13,000 crores
(b) Total expenditure = Revenue expenditure + Capital expenditure
Revenue expenditure = Revenue deficit + Revenue receipt
= â‚¹9,000 crores + â‚¹6,000 crores
= â‚¹15,000 crores
Total expenditure = Revenue expenditure + Capital expenditure
= â‚¹15,000 crores + â‚¹13,000 crores
= â‚¹28,000 crores
(c) Primary deficit = Fiscal deficit â€“ Interest payments
â‚¹5,000 crores = â‚¹12,000 crores â€“ Interest payments
Interest payments = â‚¹12,000 crores â€“ â‚¹5,000 crores
= â‚¹7,000 crores
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