Question

Calculate the revenue receipts from the following information. Revenue deficit-2.80% of GDP Revenue expenditure 10.80% of GDP

• A. 12.80
• B. 8.00
• C. 13.60
• D. 2.70

Answer 1

Answer:

B. 8.00

Understanding Revenue Receipts in Economics

Key Concepts:

• Revenue Deficit: This represents the difference between the government's total revenue receipts and its total revenue expenditure. A negative revenue deficit implies that revenue expenditure exceeds revenue receipts.

• Revenue Expenditure: This includes all expenditures of the government that do not result in the creation of assets. Examples include salaries, interest payments, and subsidies.

• Revenue Receipts: These are the receipts of the government that do not create a liability or result in the sale of assets. They primarily comprise tax revenue and non-tax revenue.

• GDP (Gross Domestic Product): The total monetary value of all the finished goods and services produced within a country's borders in a specific time period.

Calculation of Revenue Receipts:

The relationship between these components can be expressed as:

Revenue Deficit = Revenue Expenditure - Revenue Receipts

To find the Revenue Receipts, we can rearrange the formula:

Revenue Receipts = Revenue Expenditure - Revenue Deficit

Applying the Given Data:

• Revenue Deficit = 2.80% of GDP

• Revenue Expenditure = 10.80% of GDP

Therefore:

Revenue Receipts = 10.80% of GDP - 2.80% of GDP

Revenue Receipts = 8.00% of GDP