Question

The current income of the government is less than its current expenditure it is known as

Answer 1

ncomes and Expenses make up important parts of the economy as they are related to the overall growth of the economy.

Current Income:

It is the money received on short term basis.

Inflow of money.

Current Expenses:

It is the money payed or spent on short term basis.

Outflow of money.

When the current income is less than the current expenditure then that has the following affects:-

1- This shows a trade deficit in the balance of payments.

2- This has negative effects on economic growth

3- Bad affect on the stability of the country.

4- Negative affect on the currency value, which depreciates, weakening our currency. And if we sell goods as exports then we don't get as much money as we should.

5- This leads us to using reserve currencies.

6- Negatively effects the interest rates, further weakening the monetary stance of the economy.

7- Leads to rising prices of inflation.

This overall effects the welfare of society in a bad way.

Answer 2

The current income of the government is less than its current expenditure it is known as