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.

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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

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 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. 

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

What are ways that can be used by the government to correct inflationary gap using surplus budget?

  1. Reduction in taxes

  2. Increase in tax rates

  3. Reduction in public expenditure

  4. Both B & C
Reveal answer Fill a bubble to check yourself
D 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 as it can be used during inflation through increased revenue receipts by increasing taxes or through reduction in revenue expenditure by reducing public expenditure that can soak liquidity from the economy and decrease the purchasing power that results in fall of effective demand in the economy.
Multiple choice business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

_____________ budget includes receipts of the government through tax and non-tax sources and that expenditure which doesn't affect the assets and liabilities of the government.

  1. Revenue

  2. Capital

  3. Both A & B

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

Revenue budget are the money receipts or payments that does not lead to decrease or increase in the value of asset and liability of the government.  It usually includes the tax and non tax receipts of the government and the public services expenditure of the government. 


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

A __________ budget is useful during periods of high inflation.

  1. deficit

  2. balanced

  3. suprlus

  4. zero-based
Reveal answer Fill a bubble to check yourself
C 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 as it can be used during inflation through increased revenue that can soak liquidity from the economy and decrease the purchasing power. 

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

A deficit budget leads to an increase in the liability of the government or a decrease in its reserves.

  1. True

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

Deficit budget is the type of budget where the estimated government expenditure is greater than the estimated government revenue due to which there is a deficit in the budget. Deficit budget is usually regarded as a negative indicator for the economy as it increases the liability of the government or decreases the reserves of the government. 

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 budget?

  1. Capital receipts

  2. Revenue expenditure

  3. Capital expenditure

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

Capital budget are the money receipts or payments that lead to decrease or increase in the value of asset and liability of the government. It is divided into two heads 

1. Capital receipts- 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.
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

A deficit budget proves to be useful during the periods of ____________.

  1. inflation

  2. high employment

  3. depression

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

Deficit budget is the type of budget where the estimated government expenditure is greater than the estimated government revenue due to which there is a deficit in the budget. Deficit budget is usually regarded as a negative indicator for the economy but it is regarded to be useful at the time of depression in the economy as it results in reduced taxes or increased public expenditure that resolves the situation of the depressed economy.