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Economics Answer The Following Questions In One Sentence.[1 Marks Each]

Government Budget and Economy · Rajasthan Board (RBSE) STD 12 Humanities & Commerce (Rajasthan - English Medium). 142 questions.

Questions

Answer The Following Questions In One Sentence.[1 Marks Each]

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142 questions · self-marked practice — reveal the answer and mark yourself.

Question 11 Mark
Define revenue deficit.
Answer
When Revenue Expenditure of the government is greater than Revenue receipts during a given fiscal year.
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Question 21 Mark
What are capital receipts in a government budget?
Answer
Capital receipts are the receipts which either reduce assets or create liability.
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Question 31 Mark
What are revenue receipts in a government budget?
Answer
Revenue receipts are the receipts which neither reduce assets nor increase liabilities.
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Question 41 Mark
Define fiscal deficit.
Answer
When total government expenditure exceeds total government receipts excluding borrowing, the difference is called fiscal deficit.
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Question 51 Mark
What is revenue deficit?
Answer
The excess of revenue expenditure over revenue receipts is called revenue deficit.
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Question 61 Mark
Define a 'direct tax'.
Answer
When the liability to pay and incidence of a tax lie on the same person. It is called a direct tax.
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Question 81 Mark
Give the meaning of inflationary gap.
Answer
The excess of aggregate demand over aggregate supply at full employment level.
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Question 91 Mark
Why are taxes received by the government not capital receipts?
Answer
Taxes neither create any liability nor reduce any asset, so they are not capital receipts.
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Question 101 Mark
Price elasticity of supply of a good is 0.8. Is the supply ‘elastic’ or ‘inelastic’, and why?
Answer
Inelastic, because price elasticity of supply is less than one.
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Question 111 Mark
In a government budget, primary deficit is Rs. 10,000 crores and interest payment is Rs. 8,000 crores. How much is the fiscal deficit?
Answer
Fiscal deficit = 10000 + 8000 = Rs 18000 crores.
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Question 131 Mark
What are capital receipts?
Answer
Government/Budgetary receipts that either create a liability or reduce assets are called capital receipts.
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Question 141 Mark
What is capital expenditure?
Answer
Capital expenditure is one which either creates any assets or reduces any liabilities.
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Question 161 Mark
What is fiscal deficit?
Answer
It is the excess of total expenditure over the sum of revenue receipts and non-debt capital receipts.
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Question 171 Mark
What is revenue deficit in government budget?
Answer
Revenue Deficit is the excess of revenue expenditures over revenue receipts.
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Question 181 Mark
Define government budget.
Answer
Government budget is an annual financial statement showing estimated receipts and estimated expenditure of government.
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Question 191 Mark
What is revenue expenditure?
Answer
Revenue expenditure: Refers to the expenditure that neither creates any asset nor reduces any liability.
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Question 201 Mark
Fiscal deficit equals: (Choose the correct alternative)
  1. Interest payments.
  2. Borrowings.
  3. Interest payments less borrowing.
  4. Borrowings less interest payments.
Answer
  1. Borrowings.
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Question 211 Mark
What is a government budget?
Answer
Government budget is a statement of estimated receipts and estimated expenditures of government during a year.
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Question 271 Mark
State any one objective of government budget.
Answer
  1. To provide public goods.
  2. To reduce inequalities in distribution of income.
  3. To bring economic stability in the country.
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Question 291 Mark
In a government budget, revenue deficit is Rs. 50,000 crores and borrowings are Rs. 75,000 crores. How much is the fiscal deficit?
Answer
Fiscal deficit = Rs. 75000 crores.
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Question 301 Mark
What is meant by primary deficit?
Answer
Primary deficit is the difference between fiscal deficit and the interest payments made by the government.
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Question 311 Mark
Define the term ‘tax’.
Answer
A tax is a legally compulsory monetary contribution to the government by different economic units such as household, firms and other economic units. Taxes are imposed by the government on different activities, income, property, production, occupation, etc. The main motive of imposing taxes is to raise revenue and to incur various expenditures for enhancing welfare of the country.
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Question 321 Mark
What is meant by fiscal deficit?
Answer
Fiscal deficit is the difference between the Government’s budgetary expenditure and its budgetary receipts excluding borrowings.
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Question 331 Mark
Why is tax not a capital receipt?
Answer
Tax is a revenue receipt and not a capital receipt, because tax as a revenue receipt neither creates a liability nor leads to reduction in assets.
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Question 351 Mark
Why is repayment of loans a capital expenditure?
Answer
Repayment of loan is a capital expenditure, because it reduces the liability of the government.
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Question 361 Mark
Why is recovery of loans treated as a capital receipt?
Answer
Recovery of loans is treated as a Capital Receipts, because it reduces financial assets of the government.
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Question 371 Mark
Why is recovery of loans treated as a capital receipt?
Answer
Recovery of loans is treated as a capital receipt because it reduces assets of the government.
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Question 381 Mark
Why is payment of interest a revenue expenditure?
Answer
Payment of interest is treated as a revenue expenditure because:
  1. It does not reduce the liabilities of the payer.
  2. It does not add to the assets of the payer.
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Question 391 Mark
Why is payment of interest a revenue expenditure?
Answer
Payment of interest is a revenue expenditure, because it does not result in creation of assets or reduction in liability.
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Question 401 Mark
Why is interest termed as a revenue receipt?
Answer
Interest is a revenue receipt because it creates neither any liability nor causes a reduction in the assets of the government.
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Question 411 Mark
Why is interest on loans received categorised as revenue receipt?
Answer
Interest on loans received is categorised as revenue receipt, because this receipt neither creates a liability nor leads to any reduction in assets.
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Question 421 Mark
Why is entertainment tax an indirect tax?
Answer
Entertainment tax is an indirect tax, as the liability to pay this tax is of the industry which entertains, like the cinema industry, but it shifts the burden of this tax on the customers i.e. cinema-viewers.
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Question 431 Mark
Why are the borrowings by the government treated as capital receipts?
Answer
Borrowings by government are treated as capital receipts, because borrowings create a liability.
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Question 441 Mark
Why are subsidies treated as revenue expenditure?
Answer
Subsidies are treated as revenue expenditure, because they do not result in creation of assets nor reduction in liability, but are given to facilitate the normal functioning of the government.
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Question 451 Mark
Why are subsidies treated as revenue expenditure?
Answer
Subsidies are treated as revenue expenditure because they create neither any asset nor cause a reduction in any liability of the government.
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Question 461 Mark
Why are receipts from taxes categorized as revenue receipts?
Answer
Receipts from taxes are categorised as revenue receipts because they create neither any liability nor cause a reduction in the assets of the government.
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Question 471 Mark
Why are receipts from taxes categorised as revenue receipts?
Answer
Receipts from taxes are categorised as revenue receipts, because these receipts neither create a liability nor lead to a reduction in assets.
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Question 481 Mark
Who collects sales tax in India: The Central Government or The State Government?
Answer
State Governments collect sales tax in India.
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Question 501 Mark
When total expenditure = ₹ 63 lakh, revenue receipts = ₹ 27 lakh, capital receipts = ₹ 44 lakh, capital receipts net of borrowings = ₹ 22 lakh, then fiscal deficit will be ₹ 14 lakh. (True/ False)
Answer
True.

Explanation:

Fiscal deficit will be ₹ 14 lakh. Fiscal Deficit = Total expenditure - Revenue receipts - Capital receipts net of borrowings.

= ₹ 63 lakh - ₹ 27 lakh - ₹ 22 lakh = ₹ 14 lakh.

Therefore, fiscal deficit will be ₹ 14 lakh.

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Question 511 Mark
What is the significance of revenue deficit?
Answer
The significance of revenue deficit is that it gives a warning to the government either to cut its expenditure or increase its receipts. It shows inefficiency of government to meet its expenses.
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Question 521 Mark
What is the significance of primary deficit?
Answer
The significance of primary deficit is that it measures borrowing requirements of the government to meet fiscal deficit net of interest payments.
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Question 531 Mark
What is the significance of primary deficit?
Answer
The significance of primary deficit is that it measures borrowing requirements of the government to meet fiscal deficit net of interest payments.
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Question 541 Mark
What is the meaning of primary deficit?
Answer
Primary deficit refers to the difference between fiscal deficit of the current year and interest payments on the previous borrowings.
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Question 551 Mark
What is the implication of fiscal deficit?
Answer
The implication of the fiscal deficit is that it is the measure of total borrowing requirements of the government to meet its expenditures.
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Question 561 Mark
What is proportional tax?
Answer
Proportional tax is a tax in which the rate of taxation remains constant with the increase or decrease in income.
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Question 571 Mark
What is meant by revenue deficit?
Answer
Revenue deficit refers to the excess of revenue expenditure of the government over its revenue receipts.
Revenue Deficit = Revenue Expenditure - Revenue Receipts.
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Question 581 Mark
What is a revenue budget?
Answer
Revenue budget contains the details of the current receipts (called revenue receipts) and current expenditure (also known as revenue expenditure) of the government.
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Question 591 Mark
What is a capital budget?
Answer
Capital budget contains the details of the capital receipts and capital expenditure of the government.
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Question 601 Mark
What does zero primary deficit mean?
Answer
If primary deficit is zero, fiscal deficit = interest payments. It means the government has to borrow only for its interest commitments on earlier loans.
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Question 621 Mark
State any two sources of non-tax revenue receipts.
Answer
  1. Commercial revenue(profit and interest).
  2. Administrative revenue(fees, fines and penalties, escheats etc).
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Question 641 Mark
Name two components (or parts) of a government budget.
Answer
The two components of the government budget are revenue budget and capital budget.
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Question 661 Mark
Mention the indirect taxes subsumed under GST.
Answer
The indirect taxes subsumed under GST are excise duty, service tax, value added tax, custom duty etc.
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Question 671 Mark
Is borrowing by the government a revenue receipt?
Answer
No, it is not so because it creates a liability (for the government) of repayment.
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Question 681 Mark
In India, for the last several years, there has been deficit in the revenue account. How is it met or financed?
Answer
Two measures to reduce revenue deficit:
  1. Government should reduce revenue expenditure.
  2. To increase taxes, both direct and indirect.
Value : Analytic.
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Question 691 Mark
India has been suffering from the problem of fiscal deficit for the last many years. Mention any two steps.
Answer
Two measures to deal with the problem of fiscal deficit are:
  1. To curtail capital expenditure which is measured in projects of capital formation and other developmental activities.
  2. To raise revenue receipts by mobilizing resources through taxation.
Value : Analytic
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Question 701 Mark
In a Government budget, primary deficit is ₹ 10,000 crores and interest payment is ₹ 8,000 crores. How much is the fiscal deficit?
Answer
Fiscal Deficit = Primary Deficit + Interest Payment
= 10,000 + 8,000 = ₹ 18,000 Crores
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Question 711 Mark
If you are the Finance minister of India and want to set up the budget, which budget would you like to set in case of deficient demand?
Answer
Deficit budget.
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Question 721 Mark
If you are the Finance Minister of India and want to set up the budget, then what type of budget would you like to set in case of excess demand?
Answer
I should adopt surplus budget in case of excess demand because we have to decrease the amount of liquidity from the economy.
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Question 731 Mark
If the revenue receipts are ₹ 1,000 crore and revenue expenditure is ₹ 1.200 crore. how much will be the revenue deficit?
Answer
Revenue Deficit = Revenue Expenditure - Revenue Receipts
= 1,200 - 1,000 = ₹ 200 crore.
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Question 741 Mark
If the revenue receipts are ₹ 1,000 crores and revenue expenditure is ₹ 1,200 crores, how much will be the revenue deficit?
Answer
Revenue Deficit = Revenue Expenditure - Revenue Receipts
= 1,200 - 1000 = ₹ 200 crores.
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Question 751 Mark
If the borrowings of the govt. are ₹ 1,500 crores and interest payment is ₹ 300 crores. How much is the fiscal deficit?
Answer
Fiscal Deficit = Borrowing = ₹ 1,500 Crores.
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Question 771 Mark
Give two examples of capital receipts.
Answer
Examples of capital receipts are:
  1. Recovery of loans.
  2. Borrowings.
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Question 781 Mark
Give two adverse effects of deficit of budget.
Answer
Adverse effects of deficit of budget are:
  1. Increase in the flow of money in circulation and hence, inflation.
  2. Fall in the value of money.
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Question 791 Mark
Explain the relation between government deficit and government debt.
Answer
The concepts of deficit and debt are closely related. Deficit can be thought of as a flow which add to the stock of debt. It the government continues to borrow year after year, it leads to the accumulation of debt and the government has to pay more and more by way of Interest. These interest payments themselves contribute to the debt.
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Question 801 Mark
Economic growth means increasing per capita income over a period of time. Economic growth objective of the government budget depends on:
  1. Profit maximisation.
  2. Rate of savings and investment.
  3. Fair distribution of income.
  4. Removal of poverty.
Answer
  1. Rate of savings and investment.

Explanation:

Growth rate of a country depends on the rate of savings and investment. Budgetary policy creates conditions conductive for increase in savings and investment.

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Question 811 Mark
Define surplus budget.
Answer
Surplus budget is that budget in which government's estimated receipts are more than government's estimated expenditure.
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Question 821 Mark
Define revenue budget.
Answer
Revenue budget is the statement of estimated revenue receipts and estimated revenue expenditures during a fiscal year.
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Question 831 Mark
Define indirect tax. Give two examples of indirect taxes.
Answer
When the liability to pay a tax is on one person and the burden of that tax falls on some other person, it is called indirect tax, e.g., sales tax and excise duty.
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Question 841 Mark
Define fiscal deficit.
Answer
Fiscal deficit is defined as excess of total expenditure over total receipts (revenue and capital receipts) excluding borrowing.
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Question 851 Mark
Define direct tax. Give two examples of direct taxes.
Answer
When liability to pay a tax and the burden of that tax lies on the same person, it is called direct tax, e.g., income tax and corporate tax.
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Question 861 Mark
Define deficit budget.
Answer
Deficit budget is that budget in which government's estimated receipts are less than government's estimated expenditure.
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Question 871 Mark
Define capital budget.
Answer
Capital budget is the statement of estimated capital receipts and estimated capital expenditure during a fiscal year.
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Question 881 Mark
Define budget deficit.
Answer
Budget deficit or government deficit refers to a situation when budget expenditures of the government are greater than the government receipts.
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Question 891 Mark
Define balanced budget.
Answer
Balanced budget is that budget in which government's estimated receipts are equal to government's estimated expenditure.
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Question 901 Mark
Define a tax.
Answer
A tax is a legally compulsory payment imposed by the government on income and profit of persons and companies without reference to any benefit.Tax is of two types Direct tax and Indirect tax.
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Question 911 Mark
Categorize the following items into Revenue and Capital Receipts.
Statement-Sale of a public sector undertaking.
Answer
Capital receipt.
Reason: It reduces assets of the government.
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Question 921 Mark
Categorize the following items into Revenue and Capital Receipts.
Statement-Sale of 40% shares of a public sector undertaking to a private enterprise.
Answer
Capital receipt.
Reason: It reduces assets of the government.
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Question 931 Mark
Categorize the following items into Revenue and Capital Receipts.
Statement-Recovery of loans.
Answer
Capital receipt.
Reason: It reduces assets of the government. 
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Question 941 Mark
Categorize the following items into Revenue and Capital Receipts.
Statement-Profits of public sector undertakings.
Answer
Revenue receipt.
Reason: It creates neither any liability nor reduces any asset of the government.
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Question 951 Mark
Categorize the following items into Revenue and Capital Receipts.
Statement-Profits of LIC, a public enterprise.
Answer
Revenue receipt.
Reason: It creates neither any liability nor reduces any asset of the government
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Question 961 Mark
Categorize the following items into Revenue and Capital Receipts.
Statement-Loan taken from the USA for the infrastructural developments.
Answer
Capital receipt.
Reason: It creates liability for the government.
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Question 971 Mark
Categorize the following items into Revenue and Capital Receipts.
Statement-Loan from the Australian government.
Answer
Capital receipt.

Reason: It creates liability for the government.

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Question 981 Mark
Categorize the following items into Revenue and Capital Receipts.
Statement-Grants received from International Monetary Fund.
Answer
Revenue receipt.
Reason: It creates neither any liability nor reduces any asset of the government.
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Question 991 Mark
Categorize the following items into Revenue and Capital Receipts.
Statement-Funds raised from public in the form of National Saving Certificates and Kisan Vikas Patras.
Answer
Capital receipt.
Reason: It creates liability for the government.
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Question 1001 Mark
Categorize the following items into Revenue and Capital Receipts.
Statement-Foreign aid against earthquake victims.
Answer
Revenue receipt.
Reason: It creates neither any liability nor reduces any asset of the government.
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Question 1011 Mark
Categorize the following items into Revenue and Capital Receipts.
Statement-Financial help from microsoft for the victims of flood affected areas.
Answer
Revenue receipt.
Reason: It creates neither any liability nor reduces any asset of the government.
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Question 1021 Mark
Categorize the following items into Revenue and Capital Receipts.
Statement-Dividends on investments made by government.
Answer
Revenue receipt.
Reason: It creates neither any liability nor reduces any asset of the government.
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Question 1031 Mark
Categorize the following items into Revenue and Capital Receipts.

Statement-Corporation tax.

OR

Statement-Income tax received by government.

Answer
Revenue receipt.
Reason: It creates neither any liability nor reduces any asset of the government.
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Question 1041 Mark
Categorize the following items into Revenue and Capital Receipts.
Statement-Borrowings from public.
Answer
Capital receipt.
Reason: It creates liability for the government.
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Question 1051 Mark
Categorize the following items into Revenue and Capital Receipts.
Statement-Amount borrowed from Japan for construction of Metro.
Answer
Capital receipt.
Reason: It creates liability for the government.
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Question 1061 Mark
Categorize the following items into Revenue and Capital Receipts.

Statement-Sale of shares held by Government in a PSU.

Answer
Capital receipt.
Reason: It reduces assets of the government.
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Question 1071 Mark
Categorize the following items into Revenue and Capital Receipts.

Statement-Fees of a Government College.

Answer
Revenue receipt.
Reason: It creates neither any liability nor reduces any asset of the government.
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Question 1081 Mark
Categorize the following items into Revenue and Capital Receipts.

Statement-Dividend received by government from a company.

Answer
Revenue receipt.
Reason: It creates neither any liability nor reduces any asset of the government.
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Question 1091 Mark
Categorize the following items into Revenue and Capital Expenditure.
Statement-Subsidies.
Answer
Revenue expenditure.
Reason: It creates neither any asset nor reduces any liability of the government.
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Question 1101 Mark
Categorize the following items into Revenue and Capital Expenditure.
Statement-Salary paid to Army officers.
Answer
Revenue expenditure.
Reason: It creates neither any asset nor reduces any liability of the government.
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Question 1111 Mark
Categorize the following items into Revenue and Capital Expenditure.
Statement-Repayment of Loan taken from the World Bank.
Answer
Capital expenditure.
Reason: It reduces the liability of the government.
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Question 1121 Mark
Categorize the following items into Revenue and Capital Expenditure.
Statement-Repayment of loan.
Answer
Capital expenditure.
Reason: It reduces the liability of the government.
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Question 1131 Mark
Categorize the following items into Revenue and Capital Expenditure.
Statement-Purchase of Metro coaches from Japan.
Answer
Capital expenditure.
Reason: It increases asset of the government.
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Question 1141 Mark
Categorize the following items into Revenue and Capital Expenditure.
Statement-Purchase of 20 cranes for the construction of flyovers.
Answer
Capital expenditure.
Reason: It increases asset of the government.
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Question 1151 Mark
Categorize the following items into Revenue and Capital Expenditure.
Statement-Pension paid to retired government employees.
Answer
Revenue expenditure.
Reason: It creates neither any asset nor reduces any liability of the government.
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Question 1161 Mark
Categorize the following items into Revenue and Capital Expenditure.
Statement-Payment of salaries to staff of government hospitals.
Answer
Revenue expenditure.
Reason: It creates neither any asset nor reduces any liability of the government.
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Question 1171 Mark
Categorize the following items into Revenue and Capital Expenditure.
Statement-Loan given to Union Territories.
Answer
Capital expenditure.
Reason: It increases asset of the government.
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Question 1181 Mark
Categorize the following items into Revenue and Capital Expenditure
Statement-Interest paid on National Debt.
Answer
Revenue expenditure.
Reason: It creates neither any asset nor reduces any liability of the government.
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Question 1191 Mark
Categorize the following items into Revenue and Capital Expenditure.
Statement-Interest paid on National Debt.
Answer
Revenue expenditure.
Reason: It creates neither any asset nor reduces any liability of the government.
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Question 1201 Mark
Categorize the following items into Revenue and Capital Expenditure.
Statement-Grants given to State Governments.
Answer
Revenue expenditure.
Reason: It creates neither any asset nor reduces any liability of the government.
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Question 1211 Mark
Categorize the following items into Revenue and Capital Expenditure.
Statement-Grants given by central government to state government.
Answer
Revenue Expenditure.
Reason: It creates neither any asset nor reduces any liability of the government.
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Question 1221 Mark
Categorize the following items into Revenue and Capital Expenditure.
Statement- Expenditure on construction of Metro.
Answer
Capital expenditure.
Reason: It increases asset of the government.
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Question 1231 Mark
Categorize the following items into Revenue and Capital Expenditure.
Statement-Expenditure incurred on administrative and defence services.
Answer
Revenue expenditure.
Reason: It creates neither any asset nor reduces any liability of the government.
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Question 1241 Mark
Categorize the following items into Revenue and Capital Expenditure.
Statement-Defence capital equipments purchased from Germany.
Answer
Capital expenditure.
Reason: It increases asset of the government.
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Question 1251 Mark
Categorize the following items into Revenue and Capital Expenditure.
Statement-Construction of school building.
Answer
Capital expenditure.
Reason: It increases asset of the government.
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Question 1261 Mark
Categorize the following items into Revenue and Capital Expenditure.
Statement-Amount spent on construction of Bridges.
Answer
Capital expenditure.
Reason: It increases asset of the government.
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Question 1271 Mark
Categorize the following items into Revenue and Capital Expenditure.
Statement-Amount borrowed from USA repaid.
Answer
Capital expenditure.
Reason: It reduces the liability of the government.
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Question 1281 Mark
Categorize the following items into Revenue and Capital Expenditure.
10% shares purchased by the government in a private company.
Answer
Capital expenditure.
Reason: It increases asset of the government.
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Question 1291 Mark
Categorize the following items into Direct and Indirect Taxes.
Statement-Wealth tax.
Answer
Direct tax.
Reason: Its impact and incidence lie on the same person.
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Question 1301 Mark
Categorize the following items into Direct and Indirect Taxes.
Statement-Value Added tax.
Answer
Indirect tax.
Reason: Its impact and incidence lie on different persons.
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Question 1311 Mark
Categorize the following items into Direct and Indirect Taxes.
Statement-Service tax.
Answer
Indirect tax.
Reason: Its impact and incidence lie on different persons.
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Question 1321 Mark
Categorize the following items into Direct and Indirect Taxes.
Statement-Indirect tax.
Answer
Indirect tax.
Reason: Its impact and incidence lie on different persons.
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Question 1331 Mark
Categorize the following items into Direct and Indirect Taxes.
Statement-Income tax.
Answer
Direct tax.

Reason: Its impact and incidence lie on the same person.

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Question 1341 Mark
Categorize the following items into Direct and Indirect Taxes.
Statement-Excise duty.
Answer
Indirect tax.
Reason: Its impact and incidence lie on different persons
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Question 1351 Mark
Categorize the following items into Direct and Indirect Taxes.
Statement-Entertainment tax.
Answer
Indirect tax.
Reason: Its impact and incidence lie on different persons.
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Question 1361 Mark
Categorize the following items into Direct and Indirect Taxes.
Statement-Custom duty. 
Answer
Indirect tax.
Reason: Its impact and incidence lie on different persons.
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Question 1371 Mark
Categorize the following items into Direct and Indirect Taxes.
Statement-Corporation tax.
Answer
Direct tax.
Reason: Its impact and incidence lie on the same person.
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Question 1381 Mark
Categorize the following items into Direct and Indirect Taxes.
Statement Corporate tax.
Answer
Direct tax.
Reason: Its impact and incidence lie on the same person.
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Question 1391 Mark
Categorize the following items into Direct and Indirect Taxes.
Statement-Capital Gains Tax.
Answer
Direct tax.
Reason: Its impact and incidence lie on the same person.
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Question 1401 Mark
Calculate primary deficit:
S. No. Items  ₹(in crore)
(i) Fiscal deficit 9,000
(ii) lnterest payment by government 400
Answer
Primary Deficit = Fiscal Deficit - Interest Payment by Government
= 9,000 - 400
= ₹ 8,600 crore
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Question 1411 Mark
Calculate fiscal deficit:
S. No. Items  ₹(in crore)
(i) Borrowings 9,000
(ii) lnterest 400
Answer
Fiscal Deficit = Borrowings
Thus, fiscal deficit = ₹ 9,000
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Question 1421 Mark
Are fiscal deficits necessarily inflationary?
Answer
Yes, if fiscal deficits is financed by issuing new currency it will increase inflation. It may be worsen if new currency used to finance the current consumption expenditure of the government. It new money is used for infrastructural activities or other capital projects, then fiscal deficit will not be inflationary.
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