Define budget deficit and trade deficit. The excess of private investment over savings of a country in a particular year was 2000 crores. The amount of budget deficit was (-) Rs. 1500 crores. What was the volume of trade deficit of that country?
Define budget deficit and trade deficit. The excess of private investment over savings of a country in a particular year was 2000 crores. The amount of budget deficit was (-) Rs. 1500 crores. What was the volume of trade deficit of that country?
Budget Deficit: Budget deficit refers to the situation when the amount of government expenditure exceeds the revenues earned by the government.
Formula = G - T where, G represents Government expenditure. T represents government income
Trade Deficit: Trade deficit refers to the situation when the amount of the import expenditure exceeds the export revenue earned by the economy.
Trade Deficit = M - X or (I - S)+ (G - T) where M represents expenditure on import, X represents Revenue earned by exports.
It is given
I- S= 2000 crores
G - T = (-) 1500 crores
Trade Deficit =(I - S) + (G - T)
Trade Deficit = 2000 + (-1500) = 500 crores
Budget Deficit: Budget deficit refers to the situation when the amount of government expenditure exceeds the revenues earned by the government.
Formula = G - T where, G represents Government expenditure. T represents government income
Trade Deficit: Trade deficit refers to the situation when the amount of the import expenditure exceeds the export revenue earned by the economy.
Trade Deficit = M - X or (I - S)+ (G - T) where M represents expenditure on import, X represents Revenue earned by exports.
It is given
I- S= 2000 crores
G - T = (-) 1500 crores
Trade Deficit =(I - S) + (G - T)
Trade Deficit = 2000 + (-1500) = 500 crores
