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MacroScan - Fiscal Deficit (999 words) |
 | The fiscal deficit is the difference between the government's total expenditure and its total receipts (excluding borrowing). |
| The elements of the fiscal deficit are (a) the revenue deficit, which is the difference between the government’s current (or revenue) expenditure and total current receipts (that is, excluding borrowing) and (b) capital expenditure. |
| The second argument linking fiscal deficits and inflation is that in an economy in which the output of some essential commodities cannot be increased, the increase in demand caused by a larger fiscal deficit will raise prices. |
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