Q19 of 20 Page 5

What are the three levels at which the budget impacts the economy?

The government budget is an annual financial statement that shows the anticipated revenue and anticipated expenditure during a fiscal year. It has an impact at the following three levels :

a. The resources of the country are allocated on the basis of social priority.


b. It promotes aggregate fiscal discipline through a method of controlled expenditure.


c. It contains effective and efficient programs to deliver goods and services to achieve their objectives.


More from this chapter

All 20 →
16

Explain the four different concepts of the Budget deficit.

 17

How is tax revenue different from administrative revenue?

 18

What is a balanced government budget? Explain the multiplier effect of a balanced budget

 20

Consider an economy described by the following functions: C = 20 + 0.80Y, I = 30, G = 50, TR = 100 (a) Find the equilibrium level of income and the autonomous expenditure multiplier in the model. (b) If government expenditure increases by 30, what is the impact on equilibrium income? (c) If a lump-sum tax of 30 is added to pay for the increase in government purchases, how will equilibrium income change?