Question

Define budget deficit and trade deficit. The excess of private investment over saving of a country in a particular year was Rs 2,000 crores. The amount of budget deficit was (−) Rs 1,500 crores. What was the volume of trade deficit of the country?

Answer 1

Answer:

A budget deficit refers to how when a company/country or any entity has kept a budget but the outflows exceed the limit of budget. This happens when the expenses exceed the revenues earned. In the case of comparing budget deficit with trade deficit, it happens on country and economy level.

In trade deficit a country ends up consuming more goods than selling it. Meaning more imports of goods than exports.

In the budget deficit country is earning less and spending more.