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 business economics and quantitative methods measurement of national income methods of national income methods of measuring national income national income analysis

The income of the government through all sources is called public _________.

  1. money

  2. income

  3. debt

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

Public revenue refers to the income generated by the government through various sources such as taxes, fees, and profits from public enterprises.

Multiple choice commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

The part of income which is not spent on consumption is called _______. 

  1. expenditure

  2. saving

  3. investment

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

Savings refers to the part of the income which is not spent on the consumption of goods and services in the economy. It is that portion of the income which is kept aside for an instant and then re-invested into some asset in order to generate more income through these savings. 

Multiple choice business economics and quantitative methods introduction to micro economics microeconomics and macroeconomics : introduction economic ideas of j k mehta micro and macro economics

Which is the most significant factor of revenue expenditure of Central Government?

  1. Defence expenditure

  2. Subsidy

  3. Interest payment

  4. Salaries of employees
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Revenue Budget consists of the revenue receipts of Government and the expenditure met from these revenues. An expenditure which neither creates assets nor reduces liability is called Revenue Expenditure. The various types of the expenditure on the revenue amount according as their importance are:

(1) Interest payments on public debit,

(2) Civil administration,

(3) Defense,

(4) Subsidies on food, fertilizers, exports and

(5) Social services such as education, health, etc.

Multiple choice instruments of monetary policy and the reserve bank of india money and banking economics

'Deficit Financing' means _________.

  1. relying on foreign aid

  2. spending by borrowing from abroad

  3. not spending enough to ensure development

  4. spending in excess of revenues
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Deficit financing, practice in which a government spends more money than it receives as revenue, the difference is filled up by borrowing or printing new currency.

Multiple choice economics emerging issues in indian economy industrial development in india need and growth of industrialisation secondary sector : industry

Which of the following is a Developmental Expenditure of the Government?

  1. Salary and Allowances for Defence Personnel, Police

  2. Improvement in Telecommunications Network

  3. Subsidies

  4. Maintenance of Law and Order
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Developmental expenditure refers to spending that contributes to the economic growth and infrastructure of a country. Improving telecommunications is a direct investment in infrastructure.

Multiple choice economics concept of consumption function, saving function and investment function capital economy of a village wealth, capital and money

Which of these is a source of savings for Government?

  1. Tax and Fees Collections

  2. Profits of PSUs

  3. Both (a) and (b)

  4. Neither (a) nor (b)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Government savings are derived from the difference between its revenue and its consumption expenditure. Revenue sources include tax collections, fees, and the profits generated by public sector undertakings (PSUs).

Multiple choice infrastructure in india infrastructure tertiary sector economics

Deficit financing contributed to ___________________.

  1. $8.6%$ of public sector outlay in $8th$ plan
  2. $66%$ of public sector outlay in $8th$ plan
  3. $46%$ of public sector outlay in $8th$ plan

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

Deficit financing was a significant component of the funding for the 8th Five-Year Plan, accounting for 8.6 percent of the public sector outlay.

Multiple choice infrastructure in india infrastructure tertiary sector economics

Which of the following is a Non-Developmental Expenditure of the Government?

  1. Production of Energy

  2. Construction of Roads

  3. Expansion of Railway Network

  4. Subsidies
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Developmental expenditure contributes to capital formation and economic growth (like infrastructure). Subsidies are generally classified as non-developmental or transfer payments as they do not directly create assets.

Multiple choice

A plan that shows how much money you have and how you will spend it

  1. Treasure map

  2. Hoard

  3. Budget

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

A budget is an estimation of revenue and expenses over a specified future period of time, used to plan spending. A hoard is a hidden store of money or valued objects, and a widget is a placeholder name for a manufactured item.

Multiple choice

What is the primary tool of fiscal policy?

  1. Government spending

  2. Taxation

  3. Transfer payments

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

Fiscal policy utilizes government spending, taxation, and transfer payments to influence the economy.

Multiple choice

What is the primary goal of fiscal policy during a recession?

  1. To increase government spending

  2. To reduce taxes

  3. To increase transfer payments

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

During a recession, fiscal policy aims to stimulate aggregate demand by increasing government spending, reducing taxes, and increasing transfer payments.

Multiple choice

What are the two main types of fiscal policy?

  1. Expansionary fiscal policy and contractionary fiscal policy

  2. Monetary fiscal policy and contractionary fiscal policy

  3. Expansionary fiscal policy and neutral fiscal policy

  4. Neutral fiscal policy and contractionary fiscal policy
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The two main types of fiscal policy are expansionary fiscal policy and contractionary fiscal policy.

Multiple choice

What is the difference between a budget deficit and a budget surplus?

  1. A budget deficit occurs when government spending exceeds government revenue, while a budget surplus occurs when government revenue exceeds government spending.

  2. A budget deficit occurs when government revenue exceeds government spending, while a budget surplus occurs when government spending exceeds government revenue.

  3. A budget deficit occurs when government spending equals government revenue, while a budget surplus occurs when government revenue equals government spending.

  4. A budget deficit occurs when government spending is less than government revenue, while a budget surplus occurs when government revenue is less than government spending.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A budget deficit occurs when government spending exceeds government revenue, while a budget surplus occurs when government revenue exceeds government spending.