Multiple choice

Which of the following describes the difference between Fiscal Deficit and Budget Deficit?

  1. Fiscal Deficit = Budget Deficit – Interest Payment

  2. Fiscal Deficit = Budget Deficit – External Commercial Borrowings

  3. Fiscal Deficit = Budget Deficit – Money from all borrowings

  4. Fiscal Deficit = Budget Deficit – Subsidy
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C Correct answer
Explanation

A Budget Deficit is the excess of spending over income for a government, corporation, or individual over a particular period of time. The opposite of a deficit is a surplus. Fiscal deficit is noticed when government's total expenditures exceed the revenue that it generates (excluding money from borrowings). Deficit differs from debt, which is an accumulation of yearly deficits. Fiscal deficit is regarded as a positive economic event by some economists like Keynes.

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