Q16 of 36 Page 1

What is meant by primary deficit?

OR


What is meant by fiscal deficit?


Primary deficit is defined as fiscal deficit minus the interest payments on previous borrowings.

Primary deficit = Fiscal deficit – Interest payments


OR


The fiscal deficit is the excess of total expenditure over total receipts excluding borrowing during a period of the fiscal year.


Fiscal deficit = Total budget expenditure – Total budget receipts excluding borrowings.


More from this chapter

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14

Define the term ‘tax’.

 15

Suppose in a hypothetical economy, the income rises from ₹ 5,000 crores to ₹ 6,000 crores. As a result, the consumption expenditure rises from ₹ 4,000 crores to ₹ 4,600 crores. Marginal propensity to consume in such a case would be ________. (Choose the correct alternative)

 17

Define the problem of double counting in the computation of national income. State any two approaches to correct the problem of double counting.

OR


“Gross Domestic Product (GDP) does not give us a clear indication of the economic welfare of a country.” Defend or refute the given statement with valid reason.


 18

If in an economy :

Change in initial Investments (ΔI) = ₹ 500 crores


Marginal Propensity to Save (MPS) = 0.2


Find the values of the following :


(a) Investment multiplier (k)


(b) Change in final income (ΔY)