Q20 of 25 Page 1

Elaborate ‘economic growth' as the objective of the government budget.

“A government budget is an annual financial statement showing item wise estimates of expected revenue and anticipated expenditure during a fiscal year.” One of the main functions of the government budget is to mobilize sufficient resources for investment in the public sector. A government budget facilitates economic growth. A well-structured budget paves a way to achieve economic growth in an economy. Economic Growth results in a sustained increase in the real GDP. Public welfares through government budgets boost the process of economic growth. Government is responsible for providing public welfare for its citizens like education, better infrastructure, better health care etc. The economic growth also depends on the rate of savings and investment. The government is keen to make various provisions in the raise overall rate of savings and investments in the economy.


More from this chapter

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18

Explain how the level of effective demand is attained in an economy if, Aggregate Demand is more than the Aggregate Supply.

 19

What is meant by the problem of double counting? How this problem can be avoided?

OR


Discuss briefly, the circular flow of income in a two-sector economy with the help of a suitable diagram.

 21

How the following tools can be used for credit control by the central bank in an economy:

a) Open Market Operations


b) Margin Requirements

 22

a) State any two precautions that must be taken into consideration while estimating national income by the value-added method.

b) In an economy, the following transactions took place. Calculate the value of output and value added by Firm B:


i. Firm A sold to firm B goods of 80 crores; to firm C 50 crore; to household


30 crore and goods of value 10 crores remain unsold


ii. Firm B sold to firm C goods of 70 crores; to firm D 40 crore; goods of value


30 crore were exported and goods of value 5 crores were sold to the government.


OR


Differentiate between National Income at Current Prices and National Income at Constant Prices. Which of the two presents a better view of the economic growth of an economy and why?