(a) On the basis of the given information, calculate the values of the following : (i) Fiscal Deficit (ii) Primary Deficit (b) State any two examples of private goods. (c) Distinguish between public provision and public production.

Question

Accepted Answer

(a) Calculation of deficits:

Given data, the calculation depends on specific values provided.

Fiscal Deficit = Total Expenditure - Total Receipts excluding borrowings
Primary Deficit = Fiscal Deficit - Interest Payments

(b) Examples of private goods:
1. Chocolate bar - only those who pay can consume
2. Clothing - benefits limited to purchaser
3. Car - exclusive use by owner

(c) Distinguish between public and private goods:

Public Goods:
- Non-rivalrous
- Non-excludable
- Free-rider problem
- Example: National defence

Private Goods:
- Rivalrous
- Excludable
- Market provided
- Example: Food items