Question

Short answer type questions:
Explain 'revenue deficit' in a Government budget? What does it indicate?

Answer 1

Revenue deficit is the excess of revenue expenditure over revenue receipts.

Implications in reducing the revenue deficit are:

1) Inflationary spiral

2) national debt increases.

3) Vicious circle of high deficit and low GDP growth.

Two measures to reduce this deficit:

1) plan a cut in expenditure

2) raising funds through borrowing.