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
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Revenue and Capital expenditures – Revenue and Capital receipts
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Revenue Expenditure – Revenue receipts
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Capital Expenditure – Capital receipts
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Revenue and Capital receipts – Revenue and Capital expenditures
A
Correct answer
Explanation
When revenue as well as capital expenditures are more than the total revenues, it is budget deficit.
(B) is revenue deficit, (D) is budget surplus.
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the principle governing grants in aid to be given to the states
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distributing the net proceeds of the taxes between the centre and the states
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neither (A) nor (B)
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both (A) and (B)
D
Correct answer
Explanation
The Finance Commission, under Article 280, recommends both the principles governing grants-in-aid to states (distributing central funds to needy states) and the distribution of net tax proceeds between the Centre and states (vertical devolution). Both these functions are core to its mandate of fiscal federalism.
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Non-Plan Expenditure: Rs. 7,35,657 crore
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Plan Expenditure: Rs. 3,73,092 crore
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Revenue Deficit: Rs. 2,76,512 crore
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Fiscal Deficit: Rs. 3,81,408 crore
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All of the above
E
Correct answer
Explanation
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Estimates for financial year 2010-11 made in the Union Budget 2010-11
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Gross Tax Receipts
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Rs. 7,46,651 crore
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Non Tax Revenue Receipts
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Rs. 1,48,118 crore
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Total Non-Plan Expenditure
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Rs 7,35,657 crore
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Plan Expenditure
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Rs 3,73,092 crore
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Total Expenditure
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Rs 11,08,749 crore
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Revenue Deficit
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Rs 2,76,512 crore
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Fiscal Deficit
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Rs 3,81,408 crore
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Revised estimates for the current year
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Revised estimates for the following year
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Actual figures of the preceding year
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All of these
D
Correct answer
Explanation
The Indian Budget is a comprehensive financial document that includes multiple components: actual figures from the preceding year (for comparison), revised estimates for the current year (updated projections), and budget estimates for the following year. All these elements are presented together in the budget documents to provide a complete picture of government finances.
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Both A and R are true, and R is the correct explanation of A
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Both A and R are true, but R is not a correct explanation of A
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A is true, but R is false
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A is false, but R is true
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plan expenditure
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state government's expenditure
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public debt in the form of capital expenditure
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non-plan expenditure
B
Correct answer
Explanation
In the 2014-15 fiscal year, the Indian government targeted a fiscal deficit of 4.1% of GDP.
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Interest
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Non-plan expenditure
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Plan expenditure
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Subsidies
A
Correct answer
Explanation
Interest payments on government debt consistently account for a very large portion of the Indian government's expenditure, often estimated around one-fourth of total revenue collections.
C
Correct answer
Explanation
In the Union Budget 2010-11, the fiscal deficit was estimated at 5.5% of the GDP.
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Total expenditure -Total receipts
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Revenue expenditure - Revenue receipts
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Capital expenditure - Capital receipts - Borrowings
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Sum of budget deficit and Govt' s market borrowings and Liabilities
D
Correct answer
Explanation
Fiscal deficit is the difference between the government's total expenditure and its total receipts (excluding borrowings). It represents the total amount of borrowing the government needs to cover its expenses.
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$12.617 trillion
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$10.50 trillion
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$15.098 trillion
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$9.85 trillion
C
Correct answer
Explanation
By the end of 2011, the United States national debt had reached approximately 15 trillion dollars, a figure widely reported in financial news during that period.
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Economic Bill
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Finance Bill
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Supplementary Bill
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None of the above
B
Correct answer
Explanation
The Finance Bill is introduced in the Parliament to give effect to the financial proposals of the Government of India for the following financial year.
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Getting foreign aid
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Less than what is needed
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In excess of revenue
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Increasing external borrowings
C
Correct answer
Explanation
Deficit financing occurs when government expenditure exceeds its revenue, necessitating borrowing or printing money to cover the gap.