Introductory Macroeconomics

Book: Introductory Macroeconomics

Chapter: 5. The Government: Budget And The Economy

Subject: Social Science - Class 12th

Q. No. 2 of Exercises

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Distinguish between revenue expenditure and capital expenditure.

Revenue Expenditure

Capital Expenditure

Revenue expenditure is the expenditure which is financed out of revenue receipts.

Capital expenditure is the expenditure which is financed out of borrowings from public and foreign governments.

It is such expenditures of government which does not result in creation of an asset or in reduction of any liability.

This expenditure of government results in creation of assets or reduction in liabilities.

It is short period expenditure.

It is generally long period expenditure.

It is recurring in nature.

It is non-recurring in nature.

The examples of revenue expenditure are expenditure on interest, pension, salary, etc.

The example of capital expenditures are expenditure on roads, bridges, Metro project, etc.


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