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Question

If borrowings and other liabilities are added to the budget deficit, we get ___________.


A
revenue deficit
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B
capital deficit
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C
primary deficit
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D
fiscal deficit
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Solution

The correct option is D fiscal deficit
fiscal deficit occurs when a government's total expenditure exceed the revenue that it generates, excluding money from borrowings. Hence, fiscal deficit is equal to difference between actual tax collection and projected tax collection. Budget deficit is the difference between total receipts and total expenditure. If borrowings and other liabilities are added to budget deficit, we get fiscal deficits. Fiscal deficit of the government is decreasing means government spending is closer to what it's revenue in that fiscal year.

Economics

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