Multiple choice

Fiscal Deficit is equal to

  1. Current Income - Current Expenditure

  2. Capital Receipts - Capital Payments

  3. Total Income - Total Expenditure

  4. Current Income - (Current Expenditure + Capital Expenditure)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Fiscal deficit is defined as Total Revenue Income minus Total Revenue Expenditure, but this is a simplified version. More precisely, fiscal deficit = (Current Income + Capital Receipts) - (Current Expenditure + Capital Expenditure). Option D represents this concept correctly by showing that current income must cover both current and capital expenditures. Fiscal deficit indicates the total borrowing requirements of the government.

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