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 social science government budget and taxation indian taxation system taxation : need, principles and importance tax and its importance

Which one of the following is a capital receipt in government budget?

  1. Interest receipts on loans given by the Government to other parties

  2. Dividends and profits from public sector undertakings

  3. Borrowing of the Government from public

  4. Property tax receipts
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

$Capital\ Receipts\ in\ Government\ Budget$: The main items of capital receipts are loans of the government by the public borrowings through the RBI by the sale of treasury bills, loans received from foreign governments and bodies. Main items are:
(i)  Recoveries of loans

(ii) Market borrowing and other loans
(iii) External assistance
(iv) Disinvestment.

Multiple choice social studies cooperatives and consumer empowerment understanding advertising media and advertisement advertisements

What is the part of the bill amount that goes to the government known as?

  1. Expense

  2. Profit

  3. Income

  4. Tax
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A part of the bill amount goes to the government which is known as Tax. The government uses this money for our welfare. Thus, the consumer has the right to complain about a product if he/she is dissatisfied with it.

Multiple choice economics public finance and budget black money and tax evasion meaning of tax direct taxes

Public revenue includes which of the following _______.

  1. tax revenue

  2. non-tax revenue

  3. capital receipts

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

Public revenue includes all the following:

  • Tax revenue: revenue earned by the government by taxing people is called tax-revenue. It is of two types:

  1. Direct tax: tax paid to the government directly. Examples include income tax, gift tax, wealth tax, property tax, etc.
  2. Indirect tax: this tax is collected by an intermediary person from the person who ultimately bears the burden. Examples are sales tax, value-added tax (VAT), goods and services tax (GST), etc.

  • Non-tax Revenue: Non Tax Revenue Receipts are those revenue receipts which are not generated by taxing the public. Examples of non-tax revenue includes revenue from power distribution, irrigation, banking services, insurance, and community services, etc. which make the part of Government business.

  • Capital receipts: this is the income flow from one of the following sources. Cash from the sale of fixed assets, Cash from the sale of shares in the business, Cash from the issuance of a debt instrument which includes loans and bonds.

Multiple choice economics public finance and budget black money and tax evasion meaning of tax direct taxes

The difference between total expenditure and total receipts is _____.

  1. fiscal deficit

  2. budget deficit

  3. primary deficit

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

A status in which government’s expenditure exceeds more than its revenue is called budget deficit. 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 international economics indian economy during reforms liberalization, privatisation and globalisation: an appraisal structural changes in indian economy after liberalization

Which of the following is true regarding disinvestment?

  1. Assets of PSUs were sold at correct value

  2. Proceeds from disinvestment were used to build social infrastructure

  3. Proceeds from disinvestment were used to offset the shortage of government revenues

  4. There was a substantial loss to the government due to disinvestment
Reveal answer Fill a bubble to check yourself
C,D Correct answer
Explanation
The assets of PSUs have been undervalued and sold to the private sector. This means that there has been a substantial loss to the government. Moreover, the proceeds from disinvestment were used to offset the shortage of government revenues rather than using it for the development of PSUs and building social infrastructure in the country.
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 type of government budget?

  1. Balanced budget

  2. Unbalanced budget

  3. Family budget

  4. Both A & B
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

There are two types of budget in general. 

1. Balanced Budget: In this type of budget, government expenditure is equal to government revenue. 

2. Unbalanced budget: In this type of budget, government expenditure is not equal to government revenue. 

 (i) Surplus Budget: In this type of budget, government revenue is greater than government expenditure due to which there is a surplus in the budget. 

 (ii) Deficit budget: In this type of budget, government expenditure is greater than government revenue due to which there is a deficit in the budget. 

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

The budget where the government revenue is equal to the government expenditure is termed as ___________.

  1. balanced budget

  2. unbalanced budget

  3. constant budget

  4. none of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Budget is an statement of the estimates of the government receipts and government expenditure during the period of the financial year. Balanced Budget is the type of budget where government expenditure is equal to government revenue.

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

The budgetary process in India involves _____________ different operations.

  1. three

  2. four

  3. two

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

In India, the Union Budget is prepared by the Department of Economic Affairs of Ministry of Finance. The budget has four stages viz., 

(1) estimates of expenditures and revenues, 
(2) first estimate of deficit, 
(3) narrowing of deficit and 
(4) presentation and approval of budget. 
The process begins with various ministries providing initial estimates of plan and non-plan expenditures.

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

The first step in the budgetary process is ________________.

  1. Execution of the Budget

  2. Parliamentary control over finance

  3. Preparation of the budget

  4. Enactment of the budget
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The first step in the budgeting process is having a written strategic plan. This ensures that organizational resources are used to support the strategy and development of the organization. It means budgeting toward the vision

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

The budget which has gaps between the government revenue and public expenditure is termed as the ___________ budget.

  1. balanced

  2. unbalanced

  3. constant

  4. none of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Unbalanced budget is the type of budget where government expenditure is not equal to government revenue. These includes 

 (i) Surplus Budget: In this type of budget, government revenue is greater than government expenditure due to which there is a surplus in the budget. 

 (ii) Deficit budget: In this type of budget, government expenditure is greater than government revenue due to which there is a deficit in the budget. 

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

When the estimated government receipts are more than the estimated government expenditure, the budget is known to be a ___________ budget.

  1. surplus

  2. balanced

  3. deficit

  4. zero-based
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Surplus Budget is the type of budget where the expected government revenue is greater than expected government expenditure due to which there is a surplus in the budget. Surplus budget is regarded as a positive indicator for the economy.