Question

If there is a revenue deficit, what does that imply for capital expenditure

Answer 1

Explanation:

A revenue deficit indicates that the government doesn't have sufficient revenue for the normal functioning of the government departments. In other words when the government starts spending more than it earns it results in Revenue Deficit.

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Answer 2

Answer:

A revenue deficit indicates that the government doesn't have sufficient revenue for the normal functioning of the government departments. In other words when the government starts spending more than it earns it results in Revenue Deficit.

It implies that government is dissaving, i.e. government is using up savings of other sectors of the economy to finance its consumption expenditure. It means, revenue deficit either leads to an increase in liability in the form of borrowings or reduces the assets through disinvestment.

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