Book: Introductory Macroeconomics
Chapter: 2. National Income Accounting
Subject: Social Science - Class 12th
Q. No. 6 of Exercises
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Define budget deficit and trade deficit. The excess of private investment over saving of a country in a particular year was Rs 2,000 crores. The amount of budget deficit was (– )Rs 1,500 crores. What was the volume of trade deficit of that country?
Budget deficit means when the amount by which government expenditure exceeds the tax revenue earned by government and trade deficit means when the amount of import expenditure exceeds the export revenue earned by the economy.
Budget deficit = G - T
Where,
G is government expenditure
T is government income that is tax revenue
Trade deficit = M - T or (I - S) + (G - T)
Where,
M is import expenditure
T is export revenue
I is Investment X Inflow into the country
S is saving
It is given that,
I - S = Rs.2000 crores.
G - T = (-) Rs.1500 crores.
Therefore,
Trade deficit = [I - S] + [G - T]
= 2000 + [-1500]
= Rs.500 crores.
More Exercise Questions
From the following data, calculate Personal Income and Personal Disposable Income.
Rs (crore) | |
(a) Net Domestic Product at factor cost | 8,000 |
(b) Net Factor Income from abroad | 200 |
(c) Undisbursed Profit | 1,000 |
(d) Corporate Tax | 500 |
(e) Interest Received by Households | 1,500 |
(f) Interest Paid by Households | 1,200 |
(g) Transfer Income | 300 |
(h) Personal Tax | 500 |