I need the value based questions for this chapter...!!1 its mark allotment is 1
Q1. The government announces a hike in the salary of the people working in the national banks. What kind of expenditure is this? To finance the increase in the expenditure the government resorts to deficit financing. What implications will this have?Ans. This is a revenue expenditure. Deficit financing for financing this expenditure increases the money supply which thereby causes inflation in the economy.
Q2. For a flood relief program government supplies food grains and clothing to the flood victim. What kind of expenditure is this? What implication will this have on the fiscal deficit?
Ans. This is a non plan expenditure. Such non-development expenditure raises the fiscal deficit.
Q3. In a particular financial year the government earns a huge sum in the form of escheat. How would this affect the revenue deficit for the year?
Ans. Income from escheat is a revenue receipt (non-tax revenue receipt). If, the revenue expenditure for the government remains the same then, this increased revenue receipt will lower the revenue deficit.