These notes provide a foundation for students to delve deeper into the subject, explore real-world applications, and gain a more comprehensive understanding of the dynamics of income and employment determination in macroeconomics.
Deals with capital receipts and capital expenditures.
Capital receipts: Money raised for long-term investments (selling assets, borrowing).
Capital expenditures: Investment in infrastructure and development projects.
Objectives of a Government Budget:
Allocation: Decide how to spend funds on different sectors (education, healthcare, defense).
Redistribution: Promote social equity by taxing the rich and providing for the poor.
Economic Stability: Control inflation, promote growth, and maintain financial stability.
Types of Government Budgets:
1. Surplus Budget:
When government revenue exceeds expenditures.
Used for debt repayment or saving for the future.
2. Deficit Budget:
When government expenditures exceed revenue.
Common during economic crises.
Funded through borrowing.
3. Balanced Budget:
When revenue equals expenditures.
Rarely achieved in practice.
Fiscal Policy:
Government uses fiscal policy (taxation and spending) to influence the economy.
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