This economics question tests your understanding of economic models and analysis. The step-by-step answer below applies the relevant framework and explains the reasoning.
ScanSolve AI Answer
Step 1: Calculate total recurrent expenditure Total recurrent expenditure = Personal emoluments + Other recurrent expenditure Assume from table: Personal emoluments = 250~N million, Other = 150~N million Total recurrent expenditure = 250 + 150 = 400~N million Step 2: Calculate total capital expenditure From table: Capital expenditure = 350~N million (Or if sum: sum the items to 350~N million) Step 3: Total revenue Total revenue = Direct tax + Indirect tax + Non-tax revenue = 240 + 360 + 120 = 720~N million (a) Total recurrent expenditure: 400~N million Total capital expenditure: 350~N million Step 4: Percentage of total revenue collected as indirect tax Percentage = ( Indirect taxTotal revenue ) × 100\% = ( (360)/(720) ) × 100\% = 50\% (b) 50\% (c) Two examples of non-tax revenue: 1. Fees and charges 2. Investment income (or grants, fines) Step 5: Determine if budget surplus or deficit Total revenue = 720~N million Total expenditure = recurrent + capital = 400 + 350 = 750~N million Since total expenditure (750) > total revenue (720), there is a budget deficit of 30~N million. (d) The budget was a deficit. Explanation: Total expenditure exceeds total revenue. budget deficit