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.

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Fiscal Policy and Government Budget Questions

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. 

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

The expenditure incurred by the government which is out of the scope of government plans due to calamities is termed as __________.

  1. plan expenditure

  2. capital expenditure

  3. non-plan expenditure

  4. non-development expenditure
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Non planned expenditure are those government expenditure that are incurred on the non planned projects of the government. All the expenditure incurred by the government on projects after five years of plans are considered as non planned expenditure. 

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

Expenditure incurred by the government for the provision of essential services like judiciary, defence, and administration is termed as ____________.

  1. plan expenditure

  2. non-development expenditure

  3. non-plan expenditure

  4. development expenditure
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
The government expenditures incurred on activities that are directly related to or results in some economic and social development of the country such as infrastructural improvement are called developmental expenditures.
Multiple choice business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

_________ expenditure refers to the expenditure incurred by the government on various programmes in the plan.

  1. Plan

  2. Non-plan

  3. Development

  4. Non-development
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Plan expenditure refers to the expenditure that the government spends upon the planned programs. These plans usually have a five years duration and any expenditure above this period is not considered as planned expenditure. 

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

____________ expenditure is incurred for the smooth functioning of the government departments and its various services.

  1. Capital

  2. Development

  3. Revenue

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

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. These expenditures are mainly conducted to provide smooth functioning of government activities and related services. 

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

Which among the following is a component of revenue expenditure of the government?

  1. Expenditure on general services

  2. Expenditure on economic services

  3. Grants

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
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. These expenditures are mainly conducted to provide smooth functioning of government activities and related services. These expenditure includes expenditure on general services, economic services and grants provided to states or member countries. 
Multiple choice business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

Which type of expenditure is incurred by the government for the economic and social development of the country?

  1. Non-development expenditure

  2. Non-plan expenditure

  3. Development expenditure

  4. Revenue expenditure
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation
The government expenditures incurred on activities that are directly related to or results in some economic and social development of the country such as infrastructural improvement are called developmental expenditures.
Multiple choice business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

Grants, a part of the revenue expenditure of the government, refers to all the grants given by the state government to the central government.

  1. True

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

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. Therefore, grants as a part of revenue expenditure is a unilateral payment or transfer payment from central government to the state government in case of uncertainties.
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/ are included in the capital budget of the Government of India?
1. Expenditure on acquisition of assets like roads, buildings, machinery, etc.
2. Loans received from foreign governments
3. Loans and advances granted to the States and Union Territories
Select the correct answer using the code given below.

  1. $1$ only
  2. $2$ and $3$ only
  3. $1$ and $3$ only
  4. $1, 2$ and $3$
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The capital budget includes capital receipts (like loans) and capital expenditure (like infrastructure development and loans given to states). All three items listed fall under these categories.

Multiple choice economics government budget and economy trade deficits, savings and investment public finance and budget public finance, taxes and budget

Which of the following action/actions can be taken by the government to reduce the persistent challenge of budget deficit?
1. Reducing the duties on imports
2. Rationalising subsidies
3. Cutting the expenditure of revenue
4. Merging the existing welfare schemes

  1. Only1

  2. 1 and 2

  3. 2 and 4

  4. 2.3 and 4
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

By reducing import duties government revenue receipts will come down. On the other hand only merging welfare schemes will not give guarantee of expenditures on this count.

Multiple choice economics tax and its importance taxation : need, principles and importance main feature of tax public revenue and taxation

Receipts in budget can be capital or revenue. Which of these is/are capital receipts?
1- Loan recoveries
2- Provident funds deposits
3- Grants

  1. Only 1 and 2

  2. Only 1 and 3

  3. Only 2 and 3

  4. 1, 2 and 3
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Loan recoveries are the money, which the government had lent out in past, their capital comes back to the government when the borrowers repay them as capital receipts. long-term capital accruals to the government through the Provident Fund (PF), Postal Deposits, various small saving schemes (SSSs) and the government bonds sold to the public (as Indira VIkas Patra, Kisan Vikas Patra, Market Stabilization Bond, etc.) are also capital receipts. Grants are revenue receipts.

Multiple choice economics public expenditure public expenditure public finance and budget public finance, taxes and budget

If the budget shows the government expenditure to be more than its revenue, it is a ___________ budget.

  1. surplus

  2. deficit

  3. balanced

  4. imbalanced
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A budget deficit is an indicator of financial health in which expenditures exceed revenue. The term budget deficit is most commonly used to refer to government spending rather than business or individual spending, but can be applied to all of these entities.

Multiple choice economics public expenditure public expenditure public finance and budget public finance, taxes and budget

With the exception of development activities, expenditure incurred on administration, defence, interest payment, etc., is called ____________ expenditure.

  1. non-plan

  2. plan

  3. revenue

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

With the exception of development activities, expenditure incurred on administration, defence, interest payment, etc., is called non-plan expenditure.