10 Questions
What principle is a balanced budget based on?
Living within means
Why does a surplus budget denote the affluence of a country?
It signifies higher revenues than expenditures
In what situation is it important to keep aggregate demand under control?
During times of inflation
Why is a deficit budget considered best suited for developing economies?
To support economic growth
What is the main challenge in achieving a balanced budget in practice?
Balancing estimated expenditure and revenues
How can a government help control aggregate demand during inflation?
Implementing a surplus budget
What does a surplus budget aim to achieve during inflation?
Keep expenditure below revenue
Why might a government run a surplus budget during inflation?
To reduce aggregate demand
What is the significance of keeping the aggregate demand under control?
Avoiding deflationary pressures
When might a deficit budget be a suitable approach for a country?
During periods of economic recession
Study Notes
Monitors and Budgets
- Monitors expenditure and public service delivery from a gender perspective, ensuring gender commitments are translated into budgetary commitments.
- Involves dissection of the Government budgets to establish its gender differential impacts.
Outcome and Performance Budgets
- Part of result-oriented budgeting, providing both quantitative and qualitative progress reports of government performance.
- Outcome budget is presented by different departments and divisions of a ministry or government, while performance budget is presented by the ministry of finance.
- Outcome budget is a micro-level process, while performance budget is a macro-level process.
- Objective is to bring transparency and accountability, making the government more responsible to the house and public.
Types of Budgets in India
Zero-Base Budgeting
- Concept introduced in the USA by Peter Phyrr in the 1960s.
- Jimmy Carter, Governor of Georgia, USA, first introduced ZBB to the public sector.
- Involves allocation of resources to agencies based on periodic re-evaluation of programmes.
- Based on the principle of “living within means,” ensuring government expenditure does not exceed revenue.
Balanced Budget
- A balanced budget does not ensure financial stability at times of economic depression or deflation.
- Theoretically, it's easy to balance estimated expenditure and anticipated revenues, but practical implementation is challenging.
Surplus Budget
- A government budget is a surplus budget if expected government revenues exceed estimated government expenditure.
- Denotes financial affluence of a country and can be implemented at times of inflation to reduce aggregate demand.
- Reduces aggregate demand by reducing government expenditure.
Deficit Budget
- A government budget is a deficit budget if estimated government expenditure exceeds expected government revenue.
- Best suited for developing economies, such as India, helping to generate additional demand and boost economic growth.
- The government incurs excessive expenditure to improve employment rates, resulting in increased demand for goods and services, which helps revive the economy.
Test your knowledge on gender budgeting and outcome budgets, focusing on monitoring public service delivery from a gender perspective and analyzing government budgets for gender impacts. Explore concepts related to result-oriented budgeting and performance reports.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
