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True or false: statements about the budget and its deficits.

Exercise and reference answers

Questions
  1. Statement is true
    Yes
    Statement
    Fiscal deficit shows the government's total borrowing requirement.
  2. Statement is true
    No
    Statement
    Borrowings are counted as revenue receipts.
  3. Statement is true
    Yes
    Statement
    Primary deficit equals fiscal deficit minus interest payments.
  4. Statement is true
    Yes
    Statement
    PSU disinvestment is a non-debt creating capital receipt.
  5. Statement is true
    No
    Statement
    A revenue deficit means the government is saving.
  6. Statement is true
    No
    Statement
    GST is a direct tax.
Instructions
Decide whether each statement is true.

Explanation

Fiscal deficit is exactly the gap that must be borrowed, so it states the total borrowing requirement. Borrowings create a liability, so they are capital, never revenue, receipts. Disinvestment raises money without creating debt. A revenue deficit means the government is dissaving, and GST is levied on goods and services, so it is indirect.
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