Define
budget deficit and trade deficit. The excess of private investment
over saving of a country in a particular year was Rs 2,000 crores.
The amount of budget deficit was (−) Rs 1,500 crores. What was
the volume of trade deficit of the country?
Define budget deficit and trade deficit. The excess of private investment over saving of a country in a particular year was Rs 2,000 crores. The amount of budget deficit was (−) Rs 1,500 crores. What was the volume of trade deficit of the country?
Budget
Deficit
The
excess of government expenditure over government income is termed as
budget deficit.
Budget
Deficit = G
− T
Where,
G
represents government expenditure
T
represents government income
Trade
Deficit
Trade
deficit measures the excess of import expenditure over the export
revenue of a country.
Trade
Deficit = M
− X
Where,
M
represents expenditure on imports
X
represents revenue earned by exports
It
is given that,
I
− S
= Rs.2000 crores.
G
− T
= (−) Rs.1500 crores.
Therefore,
Trade
deficit = [I
− S]
+ [G
− T]
=
2000 + [−1500]
=
Rs.500 crores.
Budget Deficit
The excess of government expenditure over government income is termed as budget deficit.
Budget Deficit = G − T
Where,
G represents government expenditure
T represents government income
Trade Deficit
Trade deficit measures the excess of import expenditure over the export revenue of a country.
Trade Deficit = M − X
Where,
M represents expenditure on imports
X represents revenue earned by exports
It is given that,
I − S = Rs.2000 crores.
G − T = (−) Rs.1500 crores.
Therefore,
Trade deficit = [I − S] + [G − T]
= 2000 + [−1500]
= Rs.500 crores.
