WBCS.LIVE practice question

Fiscal deficit in the Union Budget is essentially equal to which of the following?

Solve this multiple-choice question and check the correct answer with its explanation below.

Answer options

  1. Total expenditure minus total revenue receipts.
  2. Total borrowing requirements of the government.
  3. Revenue expenditure minus revenue receipts.
  4. Primary deficit minus interest payments.

Correct answer and explanation

Correct answer: Total borrowing requirements of the government.

Explanation: āœ… Correct Answer: B) Total borrowing requirements of the government. šŸ“š Explanation: A fiscal deficit occurs when a government's total expenditures exceed the revenue that it successfully generates, excluding money from borrowings. Therefore, the numerical value of the fiscal deficit exactly indicates the total borrowing requirements of the government to bridge this financial gap. It is a crucial macroeconomic indicator used to evaluate the overall financial health and discipline of a nation.