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 book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

Excess of income over expenditure is also known as ____________.

  1. Profit

  2. Surplus

  3. Lass

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

Surplus is the excess of income over expenditure. A credit balance in the Income and expenditure account shows surplus. It is the profit earned and should be added to the capital fund on the liabilities side of the balance sheet. 

Multiple choice business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

Government expenditure increases aggregate demand.

  1. True

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

True.  Government expenditure increases Aggregate demand. Its one of the components to determine demand. Aggregate demand takes into account all the expenditure incurred in the country during the year. Government spending can be in the form of welfare, pension etc which increases the purchasing power of the people thereby increasing demand. 

Multiple choice political science constitutional amendment constitutional amendment powers of lok sabha powers of lok sabha powers and functions of rajya sabha and lok sabha

State which of the following statements is incorrect:

  1. A Money Bill deals with imposition, remission, alteration or regulation of tax

  2. A Money Bill deals with regulation borrowing money or giving of any guarantee by the Government

  3. A Money Bill deals with the money of the Consolidated Fund

  4. A Money Bill is one which provides for the imposition of fines or fees
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
Money Bills generally deals with matters relating to the imposition, abolition, remission, alteration or regulation of any tax. A bill is not a money bill if it provides for:
The imposition of fines or other pecuniary penalties or the demand or payment of a fee.
Multiple choice economics income-output determination public debt public debt main feature of tax

Which of these is a component of Aggregate demand ______________.

  1. Private consumption expenditure

  2. Investment expenditure

  3. Government expenditure

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

The various components of expenditure method are: 

National income by expenditure method = C+I+G+ (X-M) where

C= Private Consumption expenditure by households 

I=  Gross Domestic Investment expenditure

G= Government Final consumption and investment expenditure

(X-M)= Net export ( Export - Import)

Multiple choice economics income-output determination public debt public debt main feature of tax

____________ consumption expenditure refers to the expenditure, which is independent of income.

  1. Autonomous

  2. Induced

  3. Aggregate

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

Autonomous consumption refers to that consumption which occurs when there is no income in the economy. It is the minimum level of consumption that takes place in the economy. It is the consumption expenditure which is not affected by the income in the economy. 

Multiple choice economics income-output determination public debt public debt main feature of tax

____________ is the expenditure incurred for those goods and services which satisfy the wants of private individuals and institutions directly.

  1. Consumption expenditure

  2. Investment expenditure

  3. Induced expenditure

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

Consumption expenditure refers to the expenditure which is incurred on the basic act of consuming goods and services to satisfy the wants of the individuals. It is usually incurred directly by private individuals and institutions. 

Multiple choice economics income-output determination public debt public debt main feature of tax

Due to government expenditure demand increases.

  1. True

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

True. Government expenditure increases demand. Its one of the components to determine demand. Aggregate demand takes into account all the expenditure incurred in the country during the year. Government spending can be in the form of welfare, pension etc which increases the purchasing power of the people thereby increasing demand. 

Multiple choice economics macro economic analysis public debt public debt main feature of tax

Which of the following consists of the total or accumulated borrowings by the government?

  1. Balanced budget

  2. Budget deficit

  3. Government debt

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

Government debt is the amount of borrowings by government. It also known as public interest, national debt and sovereign debt.

Multiple choice economics government budget and economy public debt public debt main feature of tax

The difference between revenue deficit and grants for creation of capital assets is called _____.

  1. budget deficit

  2. effective revenue deficit

  3. primary deficit

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

Effective Revenue Deficit is the difference between revenue deficit and grants for the creation of capital assets. In other words, the Effective Revenue Deficit excludes those revenue expenditures which were done in the form of grants for the creation of capital assets.
It was introduced in the Budget for the first time in 2011-2012

Multiple choice economics government budget and economy public debt public debt main feature of tax

If in a budget the government's revenue receipts and non-debt capital revenue are less than the government's total expenditure, it is called _____.

  1. budget deficit

  2. revenue deficit

  3. fiscal deficit

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

A fiscal deficit occurs when a government's total expenditures exceed the revenue that it generates, excluding money from borrowings. Deficit differs from debt, which is an accumulation of yearly deficits.

Multiple choice social science the government budget and taxation public debt public debt main feature of tax

Fiscal policy is concerned with which of the following?

  1. Export and import

  2. Public revenue and expenditure

  3. Issue of currency

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

Fiscal policy refers to the use by the government of the various instruments such as taxation, expenditure and borrowing to achieve the objectives of balanced economic development, full employment, etc. The budget or the annual financial statement of the government, gives expression to its fiscal policy.
In accordance with Article-112 of the Indian Constitution, the President shall cause to be laid a financial statement before both the houses of parliament at the commencement of every financial year of the estimated receipts and expenditure of the Government of India for that year.

Multiple choice economics macro economic analysis public debt public debt main feature of tax

In the budget, when the government's revenue is more than its expenditure it is called __________.

  1. deficit budget

  2. surplus budget

  3. balanced budget

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

A budget surplus is a period when income or receipts exceed outlays or expenditures. A budget surplus often refers to the financial states of governments; individuals prefer to use the term 'savings' instead of the term 'budget surplus.' A surplus is an indication that the government is being effectively managed.

Multiple choice economics public debt public debt main feature of tax arbitration, tribunal adjudication and alternate dispute resolution

When is the public debt said to be unproductive?

  1. When government borrows for developmental expenditure so that it generates revenue

  2. When the public borrow for expenditure so that it generates revenue

  3. When government borrows for non-developmental expenditure such as war finance or extravagance in public administration

  4. When public borrow for expenditure such as extravagance
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Unproductive debt is debt incurred for purposes that do not generate future income or assets, such as war or administrative expenses.