The correct answer is option (1) : Deficit budget
Explanation:
- Deficit budget: This is a situation where the government's total expenditure exceeds its total revenue (excluding borrowings) within a specific period, typically a fiscal year. This means the government is spending more than it is earning.
Other options:
- Primary deficit: This refers to the fiscal deficit minus interest payments on previous borrowings. It shows the borrowing requirements of the government, excluding interest payments.
- Fiscal deficit: This represents the total borrowing requirements of the government and is calculated as the difference between total expenditure and total revenue (excluding borrowings). While it is closely related to a deficit budget, it includes borrowings and does not strictly represent the excess of expenditure over revenue alone.
- Monetary deficit: This term is less commonly used in public finance.
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