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 commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

Sales budget is a _______________.

  1. Master budget

  2. Expenditure budget

  3. Functional budget

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

A functional budget for the manufacture of a product line might include estimated costs of production, marketing, sales, labor, equipment and materials, as well as projected sales income.

Multiple choice commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

___________ is a summary of all functional budgets in a capsule form.

  1. Master budget

  2. Cash budget

  3. Flexible budget

  4. Zero-base budget
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The Master Budget is consolidated summary of the various functional budgets. It has been defined as “a summary of the budget schedules in capsule form made for the purpose of presenting, in one report, the highlights of the budget forecast”.

Multiple choice commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

a) There is no difference between a forecast and a budget
b) Sales budget is the most important budget among all budgets.
Of these

  1. Both (a) and (b) are true

  2. (a) is false, but (b) is true

  3. (a) is true, but (b) is false

  4. Both (A) and (B) are false
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Forecasting is a technique that uses historical data as inputs to make informed estimates that are predictive in determining the direction of future trends.

A budget is a financial plan for a defined period, often one year. It may also include planned sales volumes and revenues, resource quantities, costs and expenses, assets, liabilities and cash flows.
A sales budget is only an estimate of anticipated revenues, it is a vital means of projecting income based on factors such as economic conditions, competition, production resources and expenses.

Multiple choice commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

The essential of budget.

  1. Prepared in advance

  2. Relates to a future period

  3. Statement expressed in monetary or physical units

  4. All the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
  1. It is an estimate of the economic activities of an entity which related to a specified future period.
  2. It must be written and approved by the appropriate authority.
  3. It should be modified or corrected, whenever, there is a change in circumstances.
  4. Statement expressed in monetary or physical units
  5. It is prepared on the basis of past experiences and trends in the business.
  6. It is a business practice, which is used to forecast the operating activities and financial position of the business.
  7. Prepared in advance
Multiple choice commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

A budget prepared on the basis of a standard or a fixed level of activity is called a ____________.

  1. Fixed budget

  2. Flexible budget

  3. Sales budget

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

 A fixed budget is a budget that does not change or flex for increases or decreases in volume. ("Volume" could be sales, units produced, or some other activity.) A fixed budget is also known as a static budget.

Multiple choice commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

What type of budget is designed to take into account forecast changes in costs, prices etc. _______________.

  1. Rolling budget

  2. Flexible budget

  3. Functional budget

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

A rolling budget is continually updated to add a new budget period as the most recent budget period is completed. Thus, the rolling budget involves the incremental extension of the existing budget model. By doing so, a business always has a budget that extends one year into the future.

Multiple choice commercial studies budgeting meaning, comparison, types, utility and limitations of budgets public finance, budget and fiscal policy public expenditure and public revenue

Which of the following is not considered while preparing cash budget?

  1. Accrual Principle

  2. Difference in Capital and Revenue items

  3. Conservation Principle

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

A cash budget is an estimation of the cash inflows and outflows for business over a specific period of time. The budget is used to assess whether the entity has sufficient cash to operate. Companies use sales and production forecasts to create a cash budget, along with assumptions about necessary spending and accounts receivable. If a company does not have enough liquidity to operate, it must raise capital by issuing stock or by taking a debt.

Multiple choice history educational development in india educational development of independent india quality of population human capital formation in india

Education expenditure by the government is expressed as a percentage of _______.

  1. total government expenditure

  2. gross domestic product

  3. total revenue of government

  4. none of these
Reveal answer Fill a bubble to check yourself
A,B Correct answer
Explanation

Education expenditure is expressed as a percentage of total government expenditure/total government expenditure. It is expressed as how much of the total income is being committed to the development of education in the country. GDP is a monetary measure of the market value of goods and services produced over the year in the country or the total expenditure on goods and services over the year or government expenditure. 

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

The revenue generated by the government through internal and external loans is ___________.

  1. capital receipts

  2. non-tax revenue

  3. private revenue

  4. public revenue
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
  • The budget consists of capital receipts and capital payments. The capital receipts are loans raised by the Government from the general public and the foreign governments.
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.