(3), State the fiscal measures to correct excess demand? 2. They are—. Commercial Revenue: Examples-Payments for postage, toll, interest on funds borrowed from government credit corporations, electricity, Railway services. (1), If the rate of MPC is 0.75 find the value of multiplier? Revenue Deficit: – It is the excess of governments revenue expenditures over revenue receipts. Fiscal deficit indicates capacity of a country to borrow in relation to what it produces. (ii) Deficit Budget: If the expenditure made by the general government is more than the revenue received, then it is known as deficit budget. (a) Today every country aims at its economic growth to improve living standard of its people. Students who are in class 12th or preparing for any exam which is based on Class 12 Economics can … Components Of Government Budget, Budget Receipts Its Types. (b) the burden of that tax (Incidence of tax), falls on the other person, it is termed as indirect tax. This includes: (a) Neither create any liabilities for the government; and 11. 4. Balanced Budget: If the government revenue is just equal to the government expenditure made by the general government, then it is known as balanced budget. (a) Plan and non-plan expenditure: Such expenditure is incurred on long period development. Deficits And Implications Of These Deficits. For example: Expenditure on construction of a hospital building is capital expenditure, but expenditure on medicines, salaries of doctors etc. Formulae: B.D = BE > B.R (B.D= Budget Deficit, BE. In other words, it shows the extent of government dependence on borrowing to meet its budget expenditure. CBSE class 12 Government Budget and Economy class 12 Notes Economics in PDF are available for free download in myCBSEguide mobile app. Capital Expenditure: Government expenditure of the government which either creates physical or financial assets or reduction of its liability. This article on Government Budget and Economy will be useful for all those IAS aspiring candidates who want to brush up their concepts dealt in this chapter. Income tax and corporate (profit) tax are most appropriate examples of direct tax. CBSE Class 12 Macro Economics Chapter- 5 Important Questions. It may be of two types: You have entered an incorrect email address! 1000 crore as a loan to The Government of Delhi. Click Here for Class 12 Economics Notes . It shows the sources from where the government intends to get money to finance the expenditure. (ii) Non-Plan Expenditure: This refers to all such government expenditures which are beyond the scope of its planned development programmes. Budgetary Deficit = Total Expenditure – Total Receipts (ii) Capital Expenditure: An expenditure that either create assets for the government [equity or shares) of the domestic, or multinational corporations purchased by the government), or cause reduction in liabilities of the government, [repayment of loans reduces liability of the government). © Copyright 2019 ImperialStudy.com | Site Content Is for Educational Purpose only | All Content Available Free On Internet, Notes of Government Budget and the Economy Class 12 Chapter 5 Economics, Notes of Introduction to Macro Economics Class 12 Chapter 1, Notes of BALANCE OF PAYMENTS AND FOREIGN EXCHANGE RATE Class 12 Chapter 6 Economics, Chemistry in Everyday Life Notes for Class 12 Chemistry, Biomolecules Notes for Class 12 Chemistry, Free Entrepreneurship 101 – From Idea to Launch (And Beyond), Free Complete SQL Bootcamp with MySQL, PHP & Python, {100% Free} English Grammar tenses & structures Certification Course, Aldehydes Ketones and Carboxylic Acids Notes for Class 12 Chemistry, Notes for Class 12 Chemistry CBSE Chapterwise Revision, Alcohols Phenols and Ethers Notes for Class 12 Chemistry. (i) Government should reduce its unproductive or unnecessary expenditure. 2. (i) Surplus budget (ii) Deficit budget Free PDF Download - Best collection of CBSE topper Notes, Important Questions, Sample papers and NCERT Solutions for CBSE Class 12 Economics Government Budget and the Economy. CBSE Notes - NCERT Solutions. 2,00,000 and Rs. 2. (c) Developmental and non-developmental Expenditure: How is tax revenue different from administrative revenue? Deficit Budget: If the expenditure made by the general government is more than the revenue received, then it is known as deficit budget. (ii) These refer to the phases of recession, depression, recovery and boom in the economy. (i) Revenue deficit indicates dis-savings on government account because the government has to make up uncovered gap. 4. -> Non-tax revenue refers to government revenue from all sources other than taxes. We at BYJU’S provide Sandeep Garg economics class 12 Solutions to give comprehensive insight about the subject to the students. Revenue Budget: Revenue Budget contains both types of the revenue receipts of the government, i.e., Tax revenue and Non tax revenue ; and the Revenue expenditure. (iii) Since government is using capital receipts to generally meet consumption expenditure of the government, it leads to an inflationary situation in the economy. Direct taxes are those taxes levied immediately on the property and income of. Under balanced budget, the increase in income is equalent to the amount of, The multiplier effect of a balanced budget is ONE (Unitary), A balanced budget is a good policy to bring the economy, which is under employment. (i) Revenue deficit refers to the excess of revenue expenditure of the government over its revenue receipts. (v) Fiscal deficit for the year 2012-2013 is 4,89,890 crore which is 4.9% of GDP. Meaning: Budget expenditure refers to the estimated expenditure of the government on its “development and non-development programmes or “plan and non-plan programmes during the fiscal year. (a) Activities to secure a reallocation of resources: 6. Examples: Income Tax, Corporate Tax, Wealth Tax etc., Incidence and impact falls on same person. 18. This invariably implies deficit financing or meeting deficit requirements of the government by way of printing more currency. Budget is used as an important policy instrument to combat(solve) the situations of deflation and inflation. (b) The budget shows the fiscal policy. The word ‘budget’ is derived from the French word ‘bougett’ or ‘buje’ which means a “small leather bag” that contains financial proposals. It is 10% on incomes between Rs. Economics Project on Government Budget – Class 12 CBSE. Candidates who are pursuing in Class 12 are advised to revise the notes from this post. We have provided Government Budget and the Economy Class 12 Economics MCQs Questions with Answers to help students understand the concept very well. (iv) It reduces income of the rich and raises the living standard of the poor, thus, leads to equitable distribution of income. For example, presently (2012-2013) there is no tax up to annual income of Rs. 5,00,000; 20% on incomes between Rs. Allocation of resources: – The allocation of resources based on social priorities. Plan expenditure: It refers to that expenditure which is incurred by the government to fulfill its planned development programmes. 9. (iv) Another point to be noted here is that as the government borrowing increases, its liability in future to repay loan with interest also increases leading to a higher revenue deficit. For instance, no government can escape from its basic function of protecting the lives and properties of the people. Government Budget and the Economy Class 12 Revision Notes. ♦ It also includes interest and dividends on investments made by the government. The concepts should be clear which will help in faster learning. In revenue receipts both the conditions should be satisfied. Budget has two parts: NCERT Solutions for Class 6, 7, 8, 9, 10, 11 and 12, This is a descriptive chapter on government budget of Indian economy, wherein its objectives, importance, types, components, budget deficits and its types (Revenue, Fiscal, Primary Deficit) and their implications are studied. Revenue Deficit = Total Revenue Expenditure – Total Revenue Receipts NCERT Class 12 Economics Chapter Government Budget and the Economy Notes have been largely compiled by teachers with near to 20 years of experience and after studying the last ten years of examination papers. This includes expenditure on education, health, agriculture, transport, roads, rural development etc. Economics Class 12 Revision Notes Macroeconomics Chapter 5 Government Budget and The Economy. Budget receipt: It refers to the estimated receipts of the government from various sources during a fiscal year. 16. persons. Other examples of indirect taxes are excise duty, custom duty, entertainment tax, service tax etc. Types: The budget can be classified into revenue budget and capital budget. (a) Meaning: (a) Revenue Budget and (b) Capital Budget. Ans: Balanced Budget: – It is one where the estimated revenue of the government equals the estimated expenditure. Since, recovery of loan reduces the value of assets, it is termed as a capital receipts. Budget deficit: (i) Primary deficit is defined as fiscal deficit minus interest payments. • Government receipts, that either creates liabilities (of payment of loan) or reduce assets (on disinvestment) are called capital receipts. Government Budget and Economy: Economy Notes for UPSC IAS. (b) Nor cause any reduction in assets of the government, are called revenue receipts. 12. In other words, surplus budget implies a situation where government income is in excess of government expenditure. (ii) Increase in Foreign Dependence: Government also borrows from rest of the world. In capital expenditure any one of the above conditions must be satisfied. In case of an indirect tax, person first pays the tax but he is able to transfer the burden of the tax to others. (iii) A government reduces the inequality in the distribution of income and wealth by imposing taxes on the rich and giving subsidies to the poor, or spending more on welfare of the poor. ♦ Commercial Revenue (Profit and interest): Chapter at a Glance, Government Budget And Its Related Concepts. Ans: These below are the main components of the Government Budget. Itemwise estimates of expenditure discloses how much and on what items, the government is going to spend. Primary deficit: Non-Plan Expenditure: This refers to all such government expenditures which are beyond the scope of its planned development programmes. The entire NCERT textbook questions have been solved by best teachers for you. (ii) Revenue receipts are further classified into: 12,42,263 crore against total revenue receipts of Rs. i) It is the main source of revenue of the government. Its duration is from 1st April to 31st March. (iii) Industries which are potential natural monopolies are railways etc. Educational Study Material. Note: Fiscal year is the year in which country’s budgets are prepared. This document is highly rated by Commerce students and has been viewed 4500 times. 26. • In India, Budget is presented in parliament on such a day as the president may direct by convention, It is presented on last working day of February, each year. This includes both consumption and investment expenditure by the government or Planning Commission of a country. (ii) Government should increase its receipts from various sources of tax and non-tax revenue. Revenue Expenditure and Capital Expenditure, Plan Expenditure and Non-Plan Expenditure, Developmental and Non-Developmental Expenditure. (i) Causes Inflation: An important component of government borrowing includes borrowing from the Reserve Bank of India. • Non-Tax Revenue: Nawaf Gantare December 16, 2019 CBSE 12th Commerce, Economics Leave a comment. What are the three levels at which the budget impacts the economy? Important Questions with Answers for CBSE Class 12 Economics Chapter 5 – Government Budget and the Economy which is outlined by expert Economics teachers from the latest version of CBSE (NCERT) books. NCERT Solutions for Class 12 Macro Economics Chapter 8 Government Budget and the Economy includes all the important topics with detailed explanation that aims to help students to understand the concepts better. A direct tax is paid directly by the same person on whom it has been levied. Oct 10, 2020 - Key Notes - Government Budget and the Economy Commerce Notes | EduRev is made by best teachers of Commerce. (a) Plan and non-plan expenditure Government budget and the economy | Macroeconomics | class 12In this video the following topics are covered : 1. (i) Budgetary deficit refers to the excess of total budgeted expenditure (both revenue expenditure and capital expenditure) over total budgetary receipts (both revenue receipt and capital receipt). Stabilizing Activities: – The Government tries to prevent business fluctuations and maintain economic stability. (iii) Financial Burden for Future Generation: Borrowing implies accumulation of financial burdens for the future generations. (c) Developmental and non-developmental Expenditure expected revenue and anticipated expenditure during a fiscal year. Ans: i) Revenue Expenditure:- It is the expenditure incurred for the normal running of government departments and provision of various services like interest charges on debt, subsidies etc.. ii)Capital Expenditure:- It consists mainly of expenditure on acquisition of assets like land, building, machinery, equipment etc., and loans and advances granted by the Central Government to States & Union Territories. (iii) Through its budgetary policy the government of a country directs the allocation of resources in a manner such that there is a balance between the goals of profit maximisation and social welfare. MCQ Questions for Class 12 Economics with Answers were prepared based on the latest exam pattern. 1. In other words, burden of a direct tax is borne by the person on whom it is imposed which means the burden cannot be shifted to others. 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