SFG-2025-Level-1-Test-12-QP_221111-Eng
SFG-2025-Level-1-Test-12-QP_221111-Eng
SFG-2025-Level-1-Test-12-QP_221111-Eng
A
TEST BOOKLET
GENERAL STUDIES
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[1]
SFG 2025 | LEVEL 1 |Test 12 |
Q.1) What is the difference between “vote-on The proceeds from how many of the above are
account” and “interim budget”? credited to the Consolidated Fund of India?
1. The provision of a “vote-on-account’’ is a) Only one
used by a regular Government, while an b) Only two
“interim budget’’ is a provision used by a c) Only three
caretaker Government. d) All four
2. A “vote-on-account’’ only deals with the
expenditure in the Government budget, Q.4) Which of the following statements
while an “interim budget’’ includes both correctly justifies the objectives of the
expenditure and receipts. Government budgeting?
Select the correct answer using the code given 1. To ensure equitable distribution of public
below: goods
a) 1 only 2. To maintain optimum demand in the
b) 2 only economy
c) Both 1 and 2 3. Stabilizing the exchange rate of currency in
d) Neither 1 nor 2 the economy
4. To achieve zero fiscal deficit for the
Q.2) In context to Indian economy, consider Government
the following statements: Select the correct answer using the given
Statement I: The Reserve Bank of India is not below:
generally allowed to purchase the primary a) 1, 2 and 3
issues of Central Government Securities. b) 3 and 4 only
Statement II: The Fiscal Responsibility and c) 1 and 2 only
Budget Management (FRBM) Act of 2003 d) 1, 2 and 4
prohibits the monetization of government
deficit during normal circumstances. Q.5) The increases in private investment
Which one of the following is correct in spending induced by the increase in
respect of the statements given above? Government spending is known as:
a) Both statement -I and statement -II are a) Crowding in
correct and statement -II is the correct b) Deficit financing
explanation for statement -I. c) Crowding out
b) Both statement -I and statement -II are d) Pumping out
correct and statement -II is not the correct
explanation for statement -I. Q.6) Which one of the following statements is
c) Statement -I is correct but statement -II is correct with reference to ‘primary deficit’,
incorrect. sometimes seen in news?
d) Statement -I is incorrect but statement -II a) Difference between total expenditure and
is correct. total receipts of the government excluding
its borrowings.
Q.3) Consider the following items: b) Difference between gross fiscal deficit and
1. Tax Revenues received by the Government interest obligations of the government.
of India c) Difference between revenue deficit and
2. The loans obtained by Government of India grants for creation of capital assets
from foreign governments d) Total debt obligation of the government
3. Judicial Deposits including the interest payments
4. Remittances received from abroad
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[2]
SFG 2025 | LEVEL 1 |Test 12 |
Q.9) With reference to Indian economy, Q.12) Which of the following statements is/are
consider the following statements: correct regarding the tax reforms announced
Statement I: When an economy goes through in the Union Budget 2024-25?
a recession, the fiscal deficit of the 1. The Angel Tax has been abolished for all
government tends to widen, while during a classes of investors
boom, it tends to narrow. 2. The corporate tax rate for foreign
Statement II: The government’s tax revenue companies has been increased.
generally declines during a recession and 3. The standard deduction on taxable income
increases during a boom period. for salaried employees has been reduced.
Which one of the following is correct in 4. The short-term capital gains tax rate on
respect of the above statements? financial assets has been reduced.
a) Both Statement I and Statement II are Select the correct answer using the code given
correct, and Statement II is the correct below:
explanation for Statement I a) 1, 2 and 3 only
b) Both Statement I and Statement-II are b) 2, 3 and 4 only
correct and Statement II is not the correct c) 1 only
explanation for Statement I d) 3 and 4 only
c) Statement I is correct, but Statement II is
incorrect
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[3]
SFG 2025 | LEVEL 1 |Test 12 |
Q.13) Which of the following may be the 3. One of its objectives is universalisation of
implications of a higher fiscal deficit in an access to good education for tribal
economy? communities.
1. Increase in general price levels Which of the statements given above is/are
2. Crowding out of private investment correct?
3. Decline in interest rate a) 1 and 3 only
4. Appreciation of domestic currency b) 1 and 2 only
Select the correct answer using the code given c) 3 only
below: d) 1, 2 and 3
a) 1 and 2 only
b) 3 and 4 only Q.17) With reference to Centre for Processing
c) 1, 2 and 3 only Accelerated Corporate Exit (C-PACE), consider
d) 1, 2, 3 and 4 the following statements:
1. Its primary role is to streamline the
Q.14) Which of the following best describes voluntary winding-up of companies to
"equilibrium income" in an economy? under 100 days.
a) The level of national income where 2. Recently C-PACE services were extended
government expenditure equals tax for voluntary closure of Limited Liability
revenue. Partnerships (LLPs).
b) The level of national income where job Which of the statements given above is/are
creation equals the number of unemployed correct?
individuals. a) 1 only
c) The level of national income where total b) 2 only
savings equal total investment. c) Both 1 and 2
d) The level of national income where d) Neither 1 nor 2
aggregate demand matches aggregate
supply. Q.18) Consider the following pairs:
Type of Budget Description
Q.15) Which one of the following effects of 1. Zero Based Preparing the budget
creation of black money in India has been the Budget without any pre
main cause of worry to the Government of (ZBB) committed expenses.
India?
2. Performanc
Preparation of budget
a) Diversion of resources to the purchase of
e Budget based on the measurable
real estate and investment in luxury
output of the allocated
housing
expenditures
b) Investment in unproductive activities and
3. Outcome Budget that assesses
purchase of precious stones, jewellery,
Budget both measurable output
gold, etc.
and qualitative outcome
c) Large donations to political parties and
of an allocated
growth of regionalism
expenditure
d) Loss of revenue to the State Exchequer due
to tax evasion How many of the pairs given above are
correct?
a) Only one
Q.16) With reference to Pradhan Mantri
b) Only two
Janjatiya Unnat Gram Abhiyan (PMJUGA),
c) All three
consider the following statements:
d) None
1. Its focus is exclusively on Particularly
Vulnerable tribal groups.
2. The Ministry of Social Justice and
Empowerment is the nodal agency
responsible for implementation of the
scheme.
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[4]
SFG 2025 | LEVEL 1 |Test 12 |
Q.19) With reference to Indian economy, Select the correct answer using the code given
consider the following statements: below:
1. The fiscal deficit of India has been steadily a) 1, 2 and 4 only
decreasing in the last five years. b) 3, 4 and 5 only
2. The scheduled commercial banks are c) 1, 2 and 3 only
witnessing a steady decline in gross Non- d) 1, 3 and 4 only
Performing Assets (NPAs) in the last five
years. Q.23) Consider the following statements with
Which of the statements given above is/are reference to external borrowings in India:
correct? 1. External debt has to be repaid in the
a) 1 only currency in which it was borrowed.
b) 2 only 2. General Government’ external debt is the
c) Both 1 and 2 largest component of the total external
d) Neither 1 nor 2 debt of India.
3. External debt denominated in Indian Rupee
Q.20) Consider the following: is the largest component of India’s total
1. Union Excise duties external debt.
2. Income tax Which of the statements given above is/are
3. Borrowing and Other Liabilities correct?
4. Corporation tax a) 1 only
Arrange the above in increasing order of their b) 2 only
contribution to Central Government revenue c) 1 and 2 only
as per Union Budget 2024-25? d) 2 and 3 only
a) 1-3-4-2
b) 1-2-3-4 Q.24) Consider the following statements with
c) 1-4-3-2 regard to Union budget:
d) 1-4-2-3 Statement I: Revenue deficit of the Union
Government is usually greater than effective
Q.21) With reference to the Indian economy, revenue deficit.
consider the following statements: Statement II: Effective revenue deficit does
1. A share of the household financial savings not include any type of grants given to the
goes towards government borrowings. states and the Union territories.
2. Dated securities issued at market-related Which one of the following is correct in
rates in auctions form a large component of respect of the above statements?
internal debt. a) Both Statement I and Statement II are
Which of the above statements is/are correct? correct, and Statement II is the correct
a) 1 only explanation for Statement I
b) 2 only b) Both Statement I and Statement-II are
c) Both 1 and 2 correct and Statement II is not the correct
d) Neither 1 nor 2 explanation for Statement I
c) Statement I is correct, but Statement II is
Q.22) Which of the following are included in incorrect
the public debt of the Union Government? d) Statement I is incorrect, but Statement II is
1. Treasury bills issued by Union Government correct
2. Liabilities of National small saving funds
3. Ways and means advances to Union
Government
4. Securities issued to the international
financial institutions by the Union
Government.
5. Liabilities of provident funds
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[5]
SFG 2025 | LEVEL 1 |Test 12 |
Q.25) Consider the following: Q.28) Which among the following will be part
1. Demographic performance of capital receipts for the Government of
2. Forest and ecology India?
3. Governance reforms 1. Those receipts which create liability for the
4. Stable government Government.
5. Tax and fiscal efforts 2. Those receipts which reduce financial
For the horizontal tax devolution, the Fifteenth assets of the Government.
Finance Commission used how many of the 3. Those receipts that are received through
above as criteria other than population, area the means of indirect taxation.
and income distance? 4. Those receipts that are derived from the
a) Only two recoveries of loans.
b) Only three Select the correct answer using the code given
c) Only four below:
d) All five a) 1 and 2 only
b) 2 and 4 only
Q.26) The 'Golden Rule of Fiscal Policy' refers c) 1, 2 and 4
to which of the following principles? d) 1, 3 and 4
a) Governments should maintain a balanced
budget every financial year, regardless of Q.29) With reference to the Ways and Means
economic circumstances. Advances (WMAs), consider the following
b) Governments should borrow only to invest statements:
in projects that will produce long-term 1. They are short-term loan facilities provided
benefits and not to finance current by the RBI to the government to meet
expenditure. temporary mismatches in cash flow.
c) The government should always maintain a 2. Advances given by RBI to the government
surplus budget to ensure fiscal discipline. through WMA must be repaid within 14
d) Governments should borrow only during days.
periods of economic boom and avoid 3. The interest rate on WMAs is linked to the
borrowing during recessions. repo rate set by the RBI.
Which of the statements given above are
Q.27) Consider the following statements correct?
regarding Union Budget: a) 1 and 2 only
1. The term "budget" is not explicitly b) 2 and 3 only
mentioned in the Constitution of India. c) 1 and 3 only
2. The Department of Financial Services, d) 1, 2 and 3
under the Ministry of Finance, is
responsible for the preparation of the
Union Budget.
3. It outlines the strategies for raising revenue
and specifies the methods for mobilizing
resources.
Which of the statements given above is/are
correct?
a) 1 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
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[6]
SFG 2025 | LEVEL 1 |Test 12 |
Q.30) Which of the following correctly across its borders, and an independent
describes the difference between Tax monetary policy.
Collected at Source (TCS) and Tax Deducted at d) A country cannot simultaneously achieve
Source (TDS)? economic equality, trade surplus, and low
1. While TDS is applicable mainly on the inflation.
various income sources of individuals, TCS
is applicable primarily on the sale of certain Q.33) With reference to Uttar Poorva
goods and services. Transformative Industrialization Scheme
2. The individual making the payment is (UNNATI) 2024 for industrial development in
responsible for deducting TCS, whereas in the North Eastern Region of India, consider
TDS the individual receiving the payment is the following statements:
responsible for collecting TDS. 1. It is a Centrally Sponsored Scheme.
3. TDS covers payments such as rent, salaries, 2. Under the scheme, the government
interest whereas TCS covers the sale of provides capital interest subvention
goods such as, forest products, minerals incentives to eligible businesses in only
and others. manufacturing sectors.
Which of the statements given above are 3. The scheme provides a capital investment
correct? incentive only to the new business units.
a) 1 and 3 only Which of the statements given above is/are
b) 1 and 2 only correct?
c) 2 and 3 only a) 2 and 3
d) 1, 2 and 3 b) 2 only
c) 1 and 2
Q.31) Which one of the following situations d) None
best reflects the term “Indirect Transfers”
often talked about in the media with reference Q.34) Consider the following policy measures:
to India? 1. Reducing subsidies on non-essential goods.
a) An Indian company investing in a foreign 2. Implementing tax reforms to widen the tax
enterprise and paying taxes to the foreign base and enhance tax compliance.
country on the profits arising out of its 3. Increasing public expenditure on welfare
investment. schemes.
b) A foreign company investing in India and 4. Introducing austerity measures, such as
paying taxes to the country of its base on reducing administrative expenses.
the profits arising out of its investment. How many of the above measures will help in
c) An Indian company purchases tangible promoting fiscal consolidation by the Union
assets in a foreign country and sells such Government of India?
assets after their value increases and a) Only one
transfers the proceeds to India. b) Only two
d) A foreign company transfers shares and c) Only three
such shares derive their substantial value d) All four
from assets located in India.
Q.35) If a commodity is provided free to the
Q.32) Which of the following best describes the public by the Government, then
concept of the "Impossible Trinity" in a) the opportunity cost is zero.
economics? b) the opportunity cost is ignored.
a) A country cannot simultaneously have free c) the opportunity cost is transferred from
trade, price stability, and full employment. the consumers of the product to the tax-
b) A country cannot simultaneously maintain paying public.
fiscal stability, economic growth, and a d) the opportunity cost is transferred from
fixed exchange rate. the consumers of the product to the
c) A country cannot simultaneously have a Government.
fixed exchange rate, free flow of capital
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[7]
SFG 2025 | LEVEL 1 |Test 12 |
Q.36) The SMILE (Support for Marginalized Q.40) Consider the following statements
Individuals for Livelihood and Enterprise) regarding counter-cyclical fiscal policy during
scheme aims to provide comprehensive an economic boom:
rehabilitation for the welfare of which of the Statement I: Counter-cyclical fiscal policy
following pairs of communities? aims to mitigate inflationary pressures and
a) Scheduled Castes & Scheduled Tribes living excessive demand during the boom phase of
below the poverty line. an economy.
b) Transgender persons and persons engaged Statement II: Reducing government capital
in the act of begging. expenditure helps in moderating aggregate
c) Persons with disabilities and persons demand and preventing overheating of the
engaged in manual scavenging. economy during a boom.
d) Widowed women and senior citizens with Which one of the following is correct in
locomotor disabilities. respect of the statements given above?
a) Both statement -I and statement -II are
Q.37) With reference to the Union Budget correct and statement -II is the correct
2024-25 of India, consider the following explanation for statement -I.
expenditure components: b) Both statement -I and statement -II are
1. Pensions correct and statement -II is not the correct
2. Centrally sponsored schemes explanation for statement -I.
3. Subsidies c) Statement -I is correct but statement -II is
4. Interest Payment incorrect.
Which of the following options correctly d) Statement -I is incorrect but statement -II
depicts the ascending order of the expenditure is correct.
incurred by the Union Government of India in
the Union Budget 2024-25? Q.41) A decrease in tax to GDP ratio of a
a) 3-1-4-2 country indicates which of the following?
b) 1-2-4-3 1. Slowing economic growth rate.
c) 1-3-2-4 2. Less equitable distribution of national
d) 3-1-2-4 income.
Select the correct answer using the codes
Q.38) The terms "Tarun," "Shishu," and given below.
"Kishore" are frequently mentioned in the a) 1 only
news. They are associated with which of the b) 2 only
following schemes? c) Both 1 and 2
a) Sukanya Samriddhi Yojana d) Neither 1 nor 2
b) Production Linked Incentive (PLI) Scheme
c) Pradhan Mantri Poshan Abhiyan Q.42) With reference to the PM Surya Ghar
d) Pradhan Mantri Mudra Yojana Muft Bijli Yojana, consider the following
statements:
Q.39) Which of the following best describes 1. The scheme provides 100% subsidized
‘Project Nexus’, an international initiative rooftop solar systems to eligible
recently in the news? households, covering both installation and
a) A framework to harmonize global corporate maintenance costs.
tax rates for multinational corporations. 2. It is mandatory for households to have a
b) A program to coordinate fiscal stimulus valid electricity connection to be eligible
measures among G20 nations. for the scheme.
c) A project to create a unified regulatory Which of the statements given above is/are
framework for digital currencies in correct?
emerging economies. a) 1 only
d) A multilateral international initiative to b) 2 only
enable instant cross-border retail c) Both 1 and 2
payments. d) Neither 1 nor 2
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[8]
SFG 2025 | LEVEL 1 |Test 12 |
Forum Learning Centre: Delhi - 2nd Floor, IAPL House, 19 Pusa Road, Karol Bagh, New Delhi - 110005 | Patna - 2nd floor, AG Palace, E Boring Canal
Road, Patna, Bihar 800001 | Hyderabad - 1st & 2nd Floor, SM Plaza, RTC X Rd, Indira Park Road, Jawahar Nagar, Hyderabad, Telangana 500020
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[9]
SFG 2025 | LEVEL 1 |Test 12 |
Forum Learning Centre: Delhi - 2nd Floor, IAPL House, 19 Pusa Road, Karol Bagh, New Delhi - 110005 | Patna - 2nd floor, AG Palace, E Boring Canal
Road, Patna, Bihar 800001 | Hyderabad - 1st & 2nd Floor, SM Plaza, RTC X Rd, Indira Park Road, Jawahar Nagar, Hyderabad, Telangana 500020
9311740400, 9311740900 | https://academy.forumias.com | admissions@forumias.academy | helpdesk@forumias.academy
[10]