The fiscal deficit is the difference between

[amp_mcq option1=”total revenue and total expenditure” option2=”total imports and total exports” option3=”total investment and total savings” option4=”total debt and total assets” correct=”option1″]

This question was previously asked in

UPSC Combined Section Officer – 2019-20

Download PDF Attempt Online

Fiscal deficit is the difference between the government’s total expenditure and its total non-debt receipts (revenue receipts + non-debt capital receipts) in a financial year. It represents the total borrowing requirement of the government to cover its excess expenditure over its non-borrowing income. Option A, “total revenue and total expenditure,” while a simplified representation, captures the essence as the deficit (expenditure minus revenue) is the amount the government needs to borrow.

– Fiscal deficit indicates the government’s borrowing needs.
– It is calculated as Total Expenditure – (Revenue Receipts + Non-debt Capital Receipts).
– A high fiscal deficit can lead to increased government debt and potentially higher inflation.

Fiscal deficit is distinct from revenue deficit (Revenue Expenditure – Revenue Receipts) and primary deficit (Fiscal Deficit – Interest Payments). Managing the fiscal deficit is a key goal of fiscal policy.

More similar MCQ questions for Exam preparation:-