Answer:

Explanation:

If we discuss about the types of deficit so we have to consider receipt and expenditure. There are three types of deficit.

(i) Revenue deficit

(ii) Fiscal deficit and

(iii) Primary deficit.

According to the study budget deficit and revenue deficit are old ones but fiscal deficit and primary deficit are of new origin.

Each of them is analysed below:

Measure of Budgetary Deficit

Budgetary deficit is the excess of total expenditure (both revenue and capital) over total receipts (both revenue and capital).

Following are three types (measures) of deficit:

1. Revenue deficit = Total revenue expenditure – Total revenue receipts.

2. Fiscal deficit = Total expenditure – Total receipts excluding borrowings.

3. Primary deficit = Fiscal deficit-Interest payments.

The Fiscal deficit is considered the largest in size.

Option: (4)

Explanation:

The fiscal deficit is considered large and the fiscal policy is used for curbing the economy.

The government can make use of the fiscal policy by increasing the taxes.  

This situation arises due to the budget deficit and borrowing. It can be shown as follows:-

Fiscal deficit = Budget deficit + borrowings

Where the expenses that are incurred by the government are more than the revenue collected as taxes.  

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