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

Deficit financing means financing of _________.

  1. public expenditure which is in excess of public revenue

  2. public revenue which is in excess of public expenditure

  3. both (a) and (b)

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

Deficit financing specifically refers to the method of funding public expenditure that exceeds the revenue generated by 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

What does an increase in the ratio of revenue deficit to gross fiscal deficit indicate?

  1. An increase in investment

  2. An increase in the utilisation of borrowed funds for revenue purposes

  3. An increase in the utilisation of borrowed funds for imports

  4. An increase in the utilisation of borrowed funds for lending
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

$Revenue\ deficit:$ Revenue expenditure of the Central Govt is composed of plan and non-plan expenditure of the Government and is met out of revenue receipts. In case of a gap in the revenue receipts and revenue expenditure, where the expenditure is on the higher side, there exists a revenue deficit which is financed from borrowed funds.


$Fiscal\ deficit$ is the sum of budgetary deficit and the borrowed liabilities of the government for deficit financing. It indicates the total deficit of the fiscal policy. 

An increase in the ratio of revenue deficit to gross fiscal deficit would indicate higher revenue deficit, which requires use of deficit financing/borrowing for the purpose of revenue expenditure, i.e, into those avenues which would not generate any productive returns in the future.

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

If borrowings and other liabilities are added to the budget deficit it is termed as __________.

  1. fiscal deficit

  2. primary deficit

  3. capital deficit

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

The fiscal deficit is calculated as the total budget deficit plus the government's borrowings and other liabilities.

Multiple choice civics introduction to gst fundamentals of gst tax journal

A collection of SGST is the revenue of the State Government.

  1. True

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

Under GST, SGST is a tax levied on Intra State supplies of both goods and services by the State Government and will be governed by the SGST Act. 

Hence, the above statement is true.

Multiple choice business economics and quantitative methods government budget and economy consumer's budget public finance indifference curve

The _______________ of the budget starts once the Finance and Appropriation Bills are passed.

  1. preparation

  2. enactment

  3. execution

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

Once the budget is enacted into law, the government proceeds to the execution phase, where the funds are spent according to the approved budget.

Multiple choice business economics and quantitative methods government budget and economy consumer's budget public finance indifference curve

The preparation of the budget by the Ministry of Finance, Government of India, starts in the month of _________________.

  1. January

  2. September

  3. December

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

The budget preparation process in India typically begins in September, when the Ministry of Finance issues the annual budget circular to various ministries and departments to initiate the estimation process.

Multiple choice business economics and quantitative methods government budget and economy consumer's budget public finance indifference curve

Budget of the Delhi government is an example of _____________ budget.

  1. union

  2. state

  3. district

  4. national
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
State budget is the government budget which is prepared for a given financial year for a single state. The budget prepared by the state government is a state budget. Therefore, the budget of Delhi government is an example of state budget.
Multiple choice business economics and quantitative methods government budget and economy consumer's budget public finance indifference curve

The revenue budget consists of capital receipts and capital expenditure.

  1. True

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

False.

Revenue shows all types of current receipts of the government and related expenditures. Revenue budget includes 'revenue receipts' and 'revenue expenditure'. 
Revenue receipts refers to all such types of money receipts that do not create any liability for the government or does not reduce any asset of the government. 

Revenue expenditure are all such types of government expenditure that does not create any assets for the government or does not cause any reduction in the liability of the government. 

Multiple choice business economics and quantitative methods government budget and economy consumer's budget public finance indifference curve

The types of budget of the government are ______________.

  1. Union budget

  2. Plan budget

  3. Revenue budget

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

The type of budget of the government are: 

Union budget - The government budget which is prepared for a given financial year for the whole country is known as union budget. 
Plan Budget - The government budget which is prepared for a upcoming financial year with estimated receipts and expenditure is known as plan budget. 

Multiple choice business economics and quantitative methods government budget and economy consumer's budget public finance indifference curve

The revenue budget consists of revenue receipts and revenue expenditure.

  1. True

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

True. 

Revenue shows all types of current receipts of the government and related expenditures. Revenue budget includes 'revenue receipts' and 'revenue expenditure'. 
Revenue receipts refers to all such types of money receipts that do not create any liability for the government or does not reduce any asset of the government. 

Revenue expenditure are all such types of government expenditure that does not create any assets for the government or does not cause any reduction in the liability of the government. 

Multiple choice business economics and quantitative methods government budget and economy consumer's budget public finance indifference curve

________________ is an annual financial statement of the government.

  1. Report

  2. Budget

  3. Cash flow statement

  4. Funds flow statement
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Budget is an annual financial statement of the government. It is a statement of the estimates of the government receipts and government expenditure during the period of the financial year. It unveils the fiscal policy of the government, focusing on growth and stability of the economy.  

Multiple choice business economics and quantitative methods government budget and economy consumer's budget public finance indifference curve

The components of the budget are _______________ and __________________ budget.

  1. revenue and capital

  2. surplus and balanced

  3. tax and non tax

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

Budget is a statement of the estimates of the government receipts and government expenditure during the period of the financial year. There are two main component of a budget: 

1. Receipts - It refers to the estimated money receipts of the government from all sources during the fiscal year.

2. Expenditure- It refers to the estimated expenditure of the government related to its developmental and non developmental programs during the fiscal year.

Multiple choice business economics and quantitative methods government budget and economy consumer's budget public finance indifference curve

_________________ budget is the budget prepared by the central government for the country as a whole.

  1. State

  2. Union

  3. Revenue

  4. Capital
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
Union budget is the government budget that is prepared for a given financial year for the whole country. The union government prepares the union budget. 
Multiple choice business economics and quantitative methods government budget and economy consumer's budget public finance indifference curve

The budget in which its tax revenue and expenditure are equal is called ____________.

  1. surplus budget

  2. balanced budget

  3. unbalanced budget

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

Balanced budget refers to a situation where the budget expenditure of the government on tax is equal to the budget revenue of the government from tax paid by the public.