Quick Answer: What Is The Difference Between Actual And Planned Expenditure?

What is a planned investment?

PLANNED INVESTMENT: Investment expenditures that the business sector intends to undertake based on expected economic conditions, interest rates, sales, and profitability..

What is the difference between planned vs actual investment?

In general, planned investment is the amount of investment firms plan to undertake during a year. Actual investment is the amount of investment actually undertaken during a year. If actual investment is greater than planned investment, then inventories go up, since inventories are part of capital.

What are the four components of expenditure?

There are four types of expenditures: consumption, investment, government purchases and net exports. Each of these expenditure types represent the market value of goods and services.

What are the 3 types of budgets?

Depending on the feasibility of these estimates, Budgets are of three types — balanced budget, surplus budget and deficit budget.

What is non planned expenditure?

Definition: This is largely the revenue expenditure of the government, although it also includes capital expenditure. It covers all expenditure not included in the Plan Expenditure. … The biggest items of Non-Plan Expenditure are interest payments and debt servicing, defence expenditure and subsidies.

What is the meaning of capital expenditure?

Capital Expenditure meaning: The Union government defines capital expenditure as the money spent on the acquisition of assets like land, buildings, machinery, equipment, as well as investment in shares.

Why would actual expenditure ever differ from planned expenditure?

The difference between planned and actual expenditure is unplanned inventory investment. When firms sell less of their product than planned, stocks of inventories rise. Because of this, actual expenditure can be above or below planned expenditure.

What do u mean by budget?

A budget is an estimation of revenue and expenses over a specified future period of time and is usually compiled and re-evaluated on a periodic basis. Budgets can be made for a person, a group of people, a business, a government, or just about anything else that makes and spends money.

What planned savings?

The savings which are planned (intended) to be made by all the households in the economy during a period (say, a year) in the beginning of the period is called planned (or ex-ante) savings. The amount of planned (or desired) savings is given by saving function [i.e., propensity to save).

What is expenditure with example?

Expenditure definitions The definition of an expenditure is the act of spending money or time and it is something on which you spend money. An example of an expenditure is the money spent on office equipment that you have purchased. … The amount of money, time, etc. expended; expense.

What is the difference between budget and expenditure?

“Actual Expenditure” looks to the past – what was actually spent. Budget: what you think you’ll spend, or what you’re authorized to spend.

What are the four components of aggregate expenditure?

Recall that aggregate expenditure is the sum of four parts: consumer expenditure, investment expenditure, government expenditure and net export expenditure. A key part of the Income-Expenditure model is understanding that as national income (or GDP) rises, so does aggregate expenditure.

What is actual spend?

Actual expenditures is how much you really spent. For example, we actually spent just $9000 for that equipment when we planned for $10,000. So we saved ourselves $1000! It could easily have gone the other way with our really spending more, like $12,000.

What is the formula for aggregate expenditure?

Aggregate expenditure is the current value of all the finished goods and services in the economy. The equation for aggregate expenditure is: AE = C + I + G + NX. The aggregate expenditure equals the sum of the household consumption (C), investments (I), government spending (G), and net exports (NX).

What are the components of expenditure?

There are four main aggregate expenditures that go into calculating GDP: consumption by households, investment by businesses, government spending on goods and services, and net exports, which are equal to exports minus imports of goods and services.

When planned saving is less than planned investment then?

When planned savings is less than the planned investment , then the planned inventory rises above the desired level which denotes that the consumption is the economy was less then the expected level which indicates at less aggregate demand in comparison to aggregate supply.

What do you mean by public expenditure?

Public expenditure is spending made by the government of a country on collective needs and wants such as pension, provisions (such as education, healthcare and housing), security, infrastructure, etc. … Sources of government revenue include taxes, and non-tax revenues.

What is planned expenditure?

Plan expenditure is that component of government expenses which helps increase the productive capacity in the economy. … It includes outlays for different sectors, such as rural development and education.