Economics · General Awareness

Fiscal Policy and Government Budget

1,104 Questions

Fiscal policy and government budget questions evaluate your knowledge of economic stabilization, public expenditure, and deficit management. These topics are crucial for civil services and banking examinations. Practice these questions to master macroeconomic principles.

Budget deficitsFiscal policy toolsGovernment expenditureExpansionary fiscal policyPublic debt benefits

Fiscal Policy and Government Budget Questions

Multiple choice

Which one of the following statements appropriately describes the “fiscal stimulus”?

  1. It is a massive investment by the Government in manufacturing sector to ensure the supply of goods to meet the demand surge caused by rapid economic growth.

  2. It is an intense affirmative action of the government to boost economic activity in the country.

  3. It is Government's intensive action on financial institutions to ensure disbursement of loans to agriculture and allied sectors to promote greater food production and contain food inflation.

  4. It is an extreme affirmative action by the Government to pursue its policy of financial inclusion.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Fiscal stimulus- It is an intense affirmative action of the Government to boost economic activity in the country. Government measures, normally involving increased public spending and lower taxation, aimed at giving a positive jolt to economic activity.

Multiple choice

Why is the Government of India disinvesting its equity in the Central Public Sector Enterprises (CPSEs)?

  1. The Government intends to use the revenue earned from the disinvestment mainly to pay back the external debt.
  2. The Government no longer intends to retain the management control of the CPSEs.

Which of the statements given above is/are correct?

  1. 1 only

  2. 2 only

  3. Both 1 and 2

  4. Neither 1 nor 2
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The salient features of the Disinvestment Policy are:  Citizens have every right to own part of the shares of Public Sector Undertakings.  Public Sector Undertakings are the wealth of the Nation and this wealth should rest in the hands of the people.  While pursuing disinvestment, Government has to retain majority shareholding, i.e. at least 51% and management control of the Public Sector Undertakings.  Use of Disinvestment Proceeds  The income from the fund is to be used for the following broad investment objectives:  (a) 75% to finance selected social sector schemes, which promote education, health and employment  (b) 25% to meet the capital investment requirements of profitable and revivable CPSEs that yield adequate returns, in order to enlarge their capital base to finance expansion/diversification

Multiple choice

What is a budget?

  1. The amount of money you plan on spending

  2. A treaty between two countries

  3. A peace agreement

  4. The country's "report card"
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A budget is a financial plan that outlines expected income and planned expenditures over a specific period. It helps individuals or governments manage their money.

Multiple choice elements of accounts accounting for not-for-profit organisation balance sheet, classification of assets and liabilities accounting records of not-for-profit organisations financial accounting and reporting

Deficit as per Income and Expenditure Account is given effect as______________.

  1. Added to capital fund

  2. Deducted from capital fund

  3. Added to liabilities

  4. Deducted from liabilties
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The deficit as per Income and Expenditure Account is deducted from capital fund. Capital fund is the excess over assets over liabilities. Any addition or reduction in the fund is adjusted through the capital fund account. 

Multiple choice social science the government budget and taxation family budget prices and cost of living economic sources

An example of long period budgets is _________.

  1. R & D budget

  2. Master budget

  3. Sales budget

  4. Personnel budget
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Long term Budgets. The budgets are prepared to show the long term planning of the organisation. This budget is prepared normally for a period of 5 to 10 years. Example : Capital expenditure budget, research and development, long term finances etc.

Multiple choice social science the government budget and taxation family budget prices and cost of living economic sources

Budget relating to the key factor is prepared __________.

  1. After other budgets

  2. With other budgets

  3. Before other budgets

  4. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Budget relating to key factor is prepared first and all other budgets follow it. The key factor can be external or internal. the internal key factor can be sales,  material, labour, plant capacity or management. The external key factor may be government policy, market condition.

Multiple choice social science the government budget and taxation family budget prices and cost of living economic sources

Budgetary control system helps the management to eliminate _________.

  1. Undercapitalization

  2. Overcapitalization

  3. Both

  4. Subjective matter
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Budgetary Control is a technique of managerial control in which actual results are compared with budgetary standards. Budgeting is a forward planning. It serves basically as a tool for management control. Budgeting ensures planned use of all resources and funds available for a business. 

Under-capitalization refers to any situation where a business cannot acquire the funds they need, whereas overcapitalization occurs when a company has issued more debt and equity than its assets are worth. These two conditions are eliminated by proper budgeting as budgetary control helps in optimum utilisation of resources and required funding is anticipated in advance.

Multiple choice social science the government budget and taxation family budget prices and cost of living economic sources

Budget period depends upon ______________.

  1. The type of budget

  2. The nature of business

  3. The length of trade cycles

  4. All of these
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Budgeting is usually done for short, mid-range, longer term time periods. A month, a quarter and a month are usually observed budget periods. However, budget period can vary with each entity. A family might do budgeting every month. In this case, budget period is of one month. Generally, a government has a budget period of 12 months. Determining the budget period is the first step in the budgeting process. Budget period can have intermediate control periods over which comparisons are made between budgeted and actual results.

Multiple choice social science the government budget and taxation family budget prices and cost of living economic sources

Revision of budget is _________.

  1. Unnecessary

  2. Can't determine

  3. Necessary

  4. Inadequate data
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A company requires a particular budget that details categories of revenue and expenditures relevant to the particular business enterprise. Although most companies create budgets for a one-year period, ongoing evaluations regularly give the business more leeway in making adjustments as needed. Businesses utilize a budget revision process to trim excess spending, re-allocate revenues and make allowances for unexpected or uncommon expenses.

Multiple choice civics the state government (part-ii) state council of minister state council of ministers governor, chief minister and state council of ministers

Which of the following are the financial power of the Governor?

  1. Without the permission of the Governor no money bill can be presented.

  2. He/she presents the annual budget

  3. The treasury of the state remains in his/her hand.

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The Constitution endows the Governor with the executive power of the State. The Governor of a State possesses wide powers and functions – executive, legislative, financial and judicial. His financial powers include:
• Control of state contingency fund and power to authorize immediate expenditures pending future legislative sanctions. 
• Authority to approve the State's annual budget before it is laid before legislative assembly. 
• Authority to be informed and grant permission about proposals for higher taxation or expenditure before they can be discussed in the legislative assembly.