Budget Deficit is defined as:
Options
ATotal Exp - Total Rev
BRevenue Exp - Revenue Rev
CFiscal Deficit - Interest
DNone
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Public FinancePYQ - July 2021 (Inter)Question 139 of 20
All Questions Correct Answer
✅ Option a — Total Exp - Total Rev
All Options:
- ATotal Exp - Total Rev
- BRevenue Exp - Revenue Rev
- CFiscal Deficit - Interest
- DNone
Detailed Solution & Explanation
To understand the concept of Budget Deficit, we need to break it down into its components.
• The budget deficit refers to the excess of total expenditure over total revenue in the government's budget.
• This means that when the government spends more than it earns, it results in a deficit.
• The correct formula to calculate this is Total Expenditure minus Total Revenue.
The reason this is the correct definition is that it encompasses all types of government spending and revenue, not just those related to current operations or interest payments.
In contrast, some other options are too narrow or specific, such as focusing only on revenue expenditure and revenue receipts, which would not capture the full picture of the government's financial situation.
For example, option B is incorrect because it only considers revenue expenditure and revenue receipts, ignoring capital expenditures and other types of revenue.
About This Chapter: Public Finance
Paper
Paper 4: Business Economics
Weightage
10%
Key Topics
Fiscal Policy, Budget, Market Failure
This chapter deals with government finances — how the government earns (taxation) and spends (expenditure) money. Key topics include Fiscal Policy, types of taxes (Direct and Indirect), the Union Budget, Public Debt, and the concept of Market Failure and how government intervention corrects it.
View Official ICAI SyllabusExam Strategy Tip
Focus on the difference between Revenue and Capital items in the budget. Understand Fiscal Deficit and its implications. Tax-related MCQs are commonly asked.
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