Question : Which of the following is an example of an autonomous expenditure?
Option 1: Interest payments on public debt
Option 2: Subsidies provided by the government
Option 3: Government purchases of goods and services
Option 4: Personal consumption expenditure
Correct Answer: Interest payments on public debt
Solution : The correct answer is (a) Interest payments on public debt.
Autonomous expenditures are those that are not directly influenced by changes in income or other economic variables. They are independent and tend to occur regardless of changes in the overall economic activity.
Interest payments on public debt are a fixed obligation for the government. They are typically determined by the terms of the debt contracts and the outstanding debt balance. Regardless of changes in income or economic conditions, the government is obligated to make interest payments on its public debt.
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