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The Government : Budget And The Economy

Question

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Distinguish between Revenue Expenditure and Capital Expenditure in a government budget. Give examples.

Solution

Basis	Revenue Expenditure	Capital Expenditure
Creation of Assets	It does not create assets for the government	It results in the creation of assets.
Reduction of Liability	These expenditures do not result in the reduction of liability	These expenditures cause a reduction of the liability of the government.
Example	(a) Aids given to states and others. (b) Interest payments. (c) Expenditure on defence.	(a) Purchase of shares (b) Expenditure on land, building, etc. (c) Grants by the central government to the state government

Some More Questions From The Government : Budget And The Economy Chapter

Distinguish between Direct and Indirect taxes.
or
What is the basis of classifying taxes into direct tax and indirect tax? Give an example of each.

Classify the following into direct and indirect tax. Give reasons.
(i) Wealth tax, (ii) Entertainment tax, and (iii) Income tax.

What is meant by Budget (Government) Expenditure? Describe its components (items).

Distinguish between revenue expenditure and capital expenditure.
or
What is the basis of classifying government expenditure into revenue expenditure and capital expenditure?

Why are subsidies treated as revenue expenditure?

Why is payment of interest a revenue expenditure?

Why is repayment of loan a capital expenditure?

Giving reasons categorise the following into revenue expenditure and capital expenditure.
(i) Subsidies, (ii) Grants, (iii) Repayment of loan, and (iv) Construction of school building.

Difference between Plan and Non-plan Expenditure.

Difference between Development and Non-development Expenditure.

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