Question

A substantial increase in capital expenditure or revenue deficit leads to ...........​

Answer 1

Answer:

$\huge \underline{ \rm \pink{ Fiscal \: Deficit}}$

Answer 2

A substantial increase in capital expenditure or revenue deficit leads to fiscal deficit

Explanation:

• Fiscal deficit is the difference between the total revenue and total expenditure of the government. Generally fiscal deficit occurs either due to revenue deficit or a major hike in capital expenditure
• High fiscal deficits hamper the national saving rates, thereby reducing overall aggregate investment. This reduces the sustainability of growth because of low levels of public -investment.
• It leads creating  poor physical infrastructure incompatible with a large increase in the national domestic product. Since  the fiscal deficit is calculated as a percentage of gross domestic product (GDP).

To know more about Fiscal deficit

What is fiscal deficit? Mention the four kinds of fiscal deficit.

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