Government Budget-Question Bank

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ABS VIDHYA MANDHIR

THIRUVALUR
QUESTION BANK

MACRO ECONOMICS – GOVERNMENT BUDGET

1. A Government budget is prepared for a fiscal year running from:


(a) 1st January to 31st December
(b) 1st April to 31st December
(c) (c)1st April to 31st March
(d) 1st January to 30th April

2. Direct tax is called direct because it is collected directly from: (Choose the correct
alternative)
(a) The producers on goods produced
(b) The sellers on goods sold
(c) The buyers of goods
(d) The income earners

3. Which out of the following is an indirect tax?


(a) Corporation tax (b) Value-Added Tax
(c) Income Tax (d) Wealth Tax

4. GST stands for:


(a) Goods and Sales Tax (b) Goods and Services Tax
(c) Good and Simple Tax (d) None of these

5. Which one of the following is an indirect tax? (Choose the correct alternative)
(a) Profit tax (b) Wealth tax
(c) Custom duty (d) Gift tax

6. Which of the following affects national income?


(a) Goods and Services Tax
(b) Corporation Tax
(c) Subsidies
(d) None of these

7. Pension payment is an example of:


(a) Plan Expenditure
(b) Revenue Expenditure
(c) Capital Expenditure
(d) Non-Plan Expenditure

8. Subsidies are an example of:


(a) Revenue Expenditure
(b) Capital Expenditure
(c) Plan Expenditure
(d) None of them
9. Which out of the following is a non-developmental expenditure?
(a) Scientific research
(b) Social Welfare
(c) Administration
(d) None of these

10. Repayment of Loans is an example of:


(a) Capital Expenditure
(b) Non-Plan Expenditure
(c) Revenue Expenditure
(d) Plan Expenditure

11. Interest payments are subtracted from which deficit to arrive at Primary Deficit:
(a) Revenue Deficit
(b) Capital Deficit
(c) Fiscal Deficit
(d) None of these

12. Borrowing in government budget is: (choose the correct alternative)


(a) Revenue deficit
(b) Fiscal deficit
(c) Primary deficit
(d) Deficit in taxes

13. Which of the following statement is true?


(a) Loans from IMF is a Revenue Receipt.
(b) Higher revenue deficit necessarily leads to higher fiscal deficit.
(c) Borrowing by a government represents a situation of fiscal deficit.
(d) Revenue deficit is the excess of capital receipts over the revenue receipts.

14. While financing a deficit, under which measure government can print more currency:
(a) Deficit financing (b) Disinvestment
(c) By issuing bonds (d) none of them

15. Identify which of the following statements is true?


(a) Fiscal deficit is difference between planned revenue expenditure and planned revenue
receipts.
(b) Fiscal deficit is difference between total planned expenditure and total planned
receipts.
(c) Primary deficit is the difference between total planned receipt and interest payments.
(d) Fiscal deficit is the sum of primary deficit and interest payment.

16. Primary deficit in a government budget is: (Choose the correct alternative)
(a) Revenue expenditure — Revenue receipts
(b) Total expenditure — Total receipts
(c)Revenue deficit — Interest payments
(d) Fiscal Deficit —- Interest payments
17. Fiscal deficit equals: (Choose the correct alternative)
(a) Primary deficit minus interest payments
(b) Primary deficit plus interest payments
(c) Total budget expenditure minus total budget receipts
(d) None of the above

18. The receipts which neither create any liability nor lead to any reduction in asset are called
______

19. Recovery of loans, borrowing and disinvestment etc. are the example of___________
receipts.

20. Value added tax is an example of __________tax.

21. ____________is equal to fiscal deficit less interest payment.

22. Government budget is presented only by the central government in India. (True/False)

23. Budget is in surplus when the last year receipts of the government greater than last years'
expenditure of the government. (True/False)

24. Recovery of loans is a revenue receipt. (True/False)

25. Revenue expenditure does not create assets for the government. (True/False)

26. Expenditure on interest payment is a capital expenditure. (True/False)

27. Borrowing from the general public leads to an increase in revenue deficit. (True/False)

28. When total expenditure = 55,250, total receipts


= 46,400, revenue receipts = 8,200 and borrowings
= 9,000, then fiscal deficit = 650. (True/False)

29. What is a government budget?


Or
Define government budget.

30. Name two components (or parts) of a government budget.

31. What is a revenue budget?

32. What are revenue receipts in a government budget?


Or
Define the revenue receipts of a government.

33. Why is interest on loans received categorised as revenue receipt?

34. Why are receipts from taxes categorised as revenue receipts?


35. What is a tax?
Or
Define the term 'tax'.

36. Define direct tax. Give two examples of direct taxes.

37. Define indirect tax. Give two examples of indirect taxes.


38. Mention the recent tax introduced by the Government of India.

39. When was GST implemented?

40. States the categories of GST.

41. Mention the indirect taxes subsumed under GST.

42. What are capital receipts?


Or
What are capital receipts in a government budget?
Or
Define capital receipts in a government budget.

43.Why is tax not a capital receipt?

44. Why are the borrowings by the government treated as capital receipts?

45. What is revenue expenditure?

46. Why is payment of interest revenue expenditure?

47. Why are subsidies treated as revenue expenditure?

48. What is capital expenditure?

49. Why is repayment of loans a capital expenditure?

50. What is fiscal deficit?


Or
Define fiscal deficit.
Or
What is meant by fiscal deficit?

51. What is revenue deficit?


Or
What is revenue deficit in a government budget?

52. What is primary deficit?


Or
What is meant by primary deficit?

53. What is meant by trade deficit?


Short Answer Type Questions [3/4 Marks]

54. Explain the two components of government budget.

55. What is the difference between Revenue Budget and Capital Budget?

56. Which of the following is/are included in the revenue budget of the government? Give
reasons for your answer.

(a) Tax revenue,

(b) Non-tax revenue

(c) Loans received from foreign governments

(d) Small savings

(e) Interest payments

57. Which of the following is/are included in the capital budget of the government? Give
reasons for your answer.

(a) Borrowings from the public.

(b) Loans received from foreign government.

(c) Expenditure on acquisition of assets like roads, buildings, machinery etc.

(d) Loans and advances granted to the States Government.

58. Giving reasons, classify the following as revenue expenditure and capital expenditure:

(a) Subsidies

(b) Repayment of loans

(c) Expenditure on collection of taxes

(d) Expenditure on building a bridge

59. How can a government's budget help in reducing inequalities of income? Explain. Or

Explain how the government can use its budgetary policy in reducing inequality of income in
the country.

60. Explain the economic stability objective of a government budget. Or

Explain how government budget can be helpful in bringing economic stabilization in the
economy.
61. Distinguish between revenue receipts and capital receipts in a government budget. Give
two examples of each. Or

How are capital receipts different from revenue receipts? Discuss briefly.

62. Give the meaning of (a) tax revenue, and (b) non-tax revenue. Give one example of each.
Or

Explain how the government can use its budgetary policy in reducing inequality of income in
the country.

62. Give the meaning of (a) tax revenue, and (b) non-tax revenue. Give one example of each.

63. Giving reasons categorise the following into direct of tax and indirect tax:

(a) Corporation tax (b) Sales tax

(c) Wealth tax (d) Service tax

64. How will Goods and Services Tax (GST) be a comprehensive indirect tax? Explain.

65. How is the GST going to be administered?

66. Define capital receipts of government. Describe briefly the groups in which these are
classified.

67. Categorise the following government receipts into revenue and capital receipts. Give
reasons for your answer.

(a) Receipts from sale of shares of a public sector undertaking.

(b) Borrowings from public/Borrowings by Government.

(c) Profits of public sector undertakings.

(d) Income tax received by government.

68. Classify the following into capital receipts and revenue receipts. Give reasons for your
answer.

(a)Recovery of loans

(b)Interest received on loans

(c)Dividend received from public enterprises

(d)Grants from foreign governments

69. Explain the basis of classifying government expenditure into revenue expenditure and
capital

70. Explain revenue deficit in a government budget. What does it indicate?


71. Explain 'fiscal deficit' in a government budget. What does it indicate?

72. Explain 'primary deficit' in a government budget. What does it indicate?

Long Answer Type Questions [6 Marks]

73. Discuss briefly the role of the government budget in influencing 'allocation of resources'
in the economy.

Or

Explain the role the government can play through the budget in influencing allocation of
resources.

Or

Explain how the allocation of resources can be influenced in the government budget through
taxes expenditure and subsidies.

74. Explain how the government can use the budgetary policy in reducing inequalities in
incomes.

75. Explain the distinction between Revenue receipts and Capital receipts in a government
budget. Give their components.

76. How is tax revenue different from administrative revenue?

77. "Governments across nations are too much worried about the term fiscal deficit". Do you
think that fiscal deficit is necessarily inflationary in nature? Support your answer with valid
reasons.

78. Explain the meaning of the following:


(a) Revenue deficit (b) Fiscal deficit (c) Primary deficit

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