Ch 5Government Budget and the Economy — Class 12 Economics, concept-first.

Earlier in this book, the government was introduced as standing for 'the state' -- the entity that, alongside the private sector, makes an economy a mixed economy.

The Constitution of India, under Article 112, requires the government to present before Parliament a statement of estimated receipts and expenditures for every financial year.

The government budget is not merely a statement of expected receipts and expenditure. It is the government’s primary tool for influencing the economy and improving the welfare of its citizens.

Revenue receipts are those inflows of money to the government that do not create a liability for the government, nor do they reduce its assets.

Revenue expenditure is defined as any expenditure incurred by the central government for purposes other than the creation of physical or financial assets.

A government’s budget can be classified into three types based on the relationship between its total revenue and total expenditure.

When a government spends more than it collects by way of revenue, it incurs a budget deficit. More formally, a budget deficit refers to the excess of total expenditure (both revenue and capital) over…

The key terms introduced in this chapter, gathered in one place for quick revision — a compact glossary for this CBSE Class 12 Economics chapter.

This chapter — Government Budget and the Economy, Chapter 5 of the NCERT Class 12 Introductory Macroeconomics textbook — can be summed up in six key points:

Questions from official CBSE sample papers.