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. |