Economics · General Awareness

Fiscal Policy and Government Budget

1,089 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

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.

Multiple choice business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

Budget expenditure refers to the estimated expenditure of the government during a given fiscal year.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Budget expenditure refers to the overall expenditure done by the government in the economy during a given period of financial year. It has two components 

1. Revenue expenditure are all such types of government expenditure that does not create any assets for the government or does not cause any reduction in the liability of the government. 
2. Capital expenditure - Capital expenditure are all those expenditure of the government that either creates an asset for the government or reduce the liability of the government. For example - Expenditure on land and building, purchase of shares etc.

Multiple choice business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

Which of the following is a component of the capital receipts of the government?

  1. Borrowings

  2. Disinvestment

  3. Recovery of loans

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

Capital receipts are all those money receipts of the government that either creates a liability for the government or reduce an asset of the government. Therefore, capital receipts includes borrowings, disinvestment and recovery of loans. 

Multiple choice business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

____________ refers to all those revenue receipts of the government which are not a part of the tax receipts.

  1. Taxable revenue

  2. Non-tax revenue

  3. Revenue from disinvestment

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

Non tax receipts of the government are all those revenue receipts of the government that is not a part of tax receipts of the government be it is direct tax or indirect tax. For example - fees, fines, escheats, etc.