Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Government Budget and Economy

Question:

Among the following expenditures one expenditure comes under capital expenditure. Choose the correct option.

Options:

Expenditure on Vaccination being provided free of cost to prevent Covid-19

Expenditure on Ujjwala Scheme

Free ration to poor people by the Government during Covid-19

Expenditure on construction of Delhi-Mumbai corridor

Correct Answer:

Expenditure on construction of Delhi-Mumbai corridor

Explanation:

The correct answer is option (4) : Expenditure on construction of Delhi-Mumbai corridor

Explanation :

Capital expenditure involves investments in assets that provide long-term benefits. Constructing infrastructure like the Delhi-Mumbai corridor falls under capital expenditure. The other options involve current or revenue expenditures.

Explanation:

  • Expenditure on Vaccination being provided free of cost to prevent Covid-19: This is categorized as revenue expenditure as it is aimed at current consumption or providing services in the current period.

  • Expenditure on Ujjwala Scheme: This is typically a revenue expenditure aimed at providing immediate benefits or subsidies.

  • Free ration to poor people by the Government during Covid-19: This is also a revenue expenditure aimed at providing immediate relief and support.

  • Expenditure on construction of Delhi-Mumbai corridor: This is a capital expenditure because it involves investment in long-term assets that will benefit the economy over an extended period. Capital expenditures are typically for creating infrastructure, acquiring fixed assets, or investing in projects that provide long-term benefits to the economy.