Distinguish between revenue expenditure | Class 12 Macro Economics Chapter Government Budget and Economy, Government Budget and Economy NCERT Solutions

Question:

Distinguish between revenue expenditure and capital expenditure.

Answer:

Basis Revenue expenditure Capital Expenditure

Creation of Assets

It does not create assets for the government.

It results in the creation of assets.

Reduction of liability

These expenditures do not result in the reduction of Liability.

These expenditures cause a reduction of the liability of the government.

Items

(a) Aids given to states and others
(b) Interest payments
(c) Expenditure on defence

(a) Purchase of shares
(b) Expenditure on land, building, etc.
(c) Grants by the central government to the state Government.


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Welcome to the NCERT Solutions for Class 12 Macro Economics - Chapter . This page offers a step-by-step solution to the specific question from Excercise 1 , Question 2: Distinguish between revenue expenditure and capital expenditure.....