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 economics income determination unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

Government expenditure is a component of the ____________ in the economy

  1. aggregate supply

  2. aggregate income

  3. aggregate demand

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

Government expenditure refers to the expenditure made by the government during the period of an accounting year which forms a part of the aggregate demand in the economy which is incurred either for consumption purpose like judiciary system or investment purpose like infrastructural development. 

Multiple choice economics economics of development and planning economics of planning objectives of economic planning in india major economic problems

A finance bill is __________.

  1. a bill which would authorise expenditure out of the Consolidated Fund of India.

  2. a bill ordinary introduced each year to give effect to financial proposals of the Government of India for the next following financial year.

  3. a bill to authorise expenditure on the Contingency Fund of India

  4. a bill to control the finances of the Union and State Government
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A finance bill is a Money Bill. It is defined in Article 110 of the Constitution. It is passed by the Parliament within a period of 75 days of its introduction. It is a bill introduced each year to give effect to financial proposals of the Government of India for the next following financial year.

Thus, the correct answer is B.

Multiple choice economics economics of development and planning economics of planning objectives of economic planning in india major economic problems

The term budget is derived from the ________ word Bougette.

  1. Latin

  2. French

  3. German

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

The word budget has been derived from a French word Bougette. This word Bougette means 'little bag.' Furthermore, this word turned up in English in the fifteenth century, after having travelled through the French Bougette. Furthermore, after years of development, the budget was started getting prepared for every single country.

Thus, the correct answer is B.

Multiple choice organisation of commerce and management liberalization, privatization and globalization concept and necessity of globalization highlights of lpg policy multinational corporations

___________ enables the government to concentrate more on the essential state.

  1. Privatization

  2. Political policies

  3. Increase in tax returns

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

Privatization enables the government to concentrate more on the essential state.Privatization refers to  the process of transferring of ownership and management of an enterprise from public sector to the private sector. Another dimension of privatization is opening up of an industry that has been reserved for the public sector to the private sector.The objective of privatization is to generate revenues for the state.

Multiple choice economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

The concept of which deficit was given up in 1997?

  1. Budgetary Deficit

  2. Fiscal Deficit

  3. Revenue Deficit

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

The concept of 'Budgetary Deficit' was discontinued in India starting from the 1997-98 budget. It was replaced by more precise measures like fiscal deficit, revenue deficit, and primary deficit.

Multiple choice economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

Total Expenditure - Total Receipts =

  1. Budgetary Deficit

  2. Fiscal Deficit

  3. Revenue Deficit

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

Budgetary deficit is the excess of total government expenditure (both revenue and capital) over total government receipts (both revenue and capital). It is the deficit in the budgetary estimates of the government.

Multiple choice economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

Total Expenditure - [Revenues Receipts + Recovering + Sale of Public Assets]=

  1. Budgetary Deficit

  2. Fiscal Deficit

  3. Revenue Deficit

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

Fiscal deficit is defined as excess of total budget expenditure over total budget receipts excluding borrowings during a fiscal year. In simple words, it is amount of borrowing the government has to resort to meet its expenses. A large deficit means a large amount of borrowing. 

Multiple choice economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

Select the correct means by which the GoI manages its needs of deficit financing, using the code given below:
1. By printing currencies and internal borrowing
2. External grants, disinvestment proceeds and external borrowings

  1. Only 1

  2. Only 2

  3. 1 and 2

  4. Neither 1 nor 2
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Had 'disinvestment proceeds' not been there, the second statement would also have been correct till 2004. Disinvestment proceeds used to be one of the means of raising money to meet fiscal deficit requirements till 2005 unitll there was no National Investment Fund (the proceeds now go directly into this fund and are considered Public Accounts of India since 2013.

Multiple choice economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

In comparison to revenue deficit, the size of fiscal deficit is always _____.

  1. higher

  2. smaller

  3. similar

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

The fiscal deficit is the difference between the total revenue and total expenditure of the government. Revenue deficit hence arises when the government's actual net receipts is lower than the projected receipts. So, the size of fiscal deficit is always higher than revenue deficit.

Multiple choice economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

Pick out the item which is not a part of non-plan expenditure on the revenue side.

  1. Defence

  2. Central Assistance to states

  3. Subsidies

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

Central assistance to states is not a part of non-plan expenditure on the revenue side. Non-plan revenue expenditure is accounted for by interest payments, subsidies (mainly on food and fertilisers), wage and salary payments to government employees, grants to States and Union Territories governments, pensions, police, economic services in various sectors, other general services such as tax collection, social services, and grants to foreign governments. 

Multiple choice economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

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

The budget deficit is the difference between current government's spending on goods and services and total current revenue from all types of taxes net of transfer payments.

Multiple choice economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

Capital account of the government consists of _______.

  1. capital receipts

  2. capital expenditure

  3. both A and B

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

The capital account of the government budget comprises capital receipts, such as loans and disinvestment proceeds, and capital expenditure, which includes spending on assets like infrastructure and machinery.

Multiple choice economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

Gross fiscal deficit is calculated by subtracting which of the following from total expenditure ________.

  1. revenue receipts

  2. non-debt capital receipts

  3. both A and B

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

Gross Fiscal Deficit is defined as Total Expenditure minus (Revenue Receipts + Non-debt Capital Receipts). This calculation isolates the portion of expenditure that must be financed through borrowing.