Tag: government budget and economy

Questions Related to government budget and economy

The revenue budget consists of revenue receipts and revenue expenditure.

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

  1. True

  2. False

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Correct Option: A
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. 

_______________ budget is the budget prepared by the state government.

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

  1. Union

  2. State

  3. District

  4. Central

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Correct Option: B
Explanation:

The state budget is the government budget which is prepared for a given financial year for a single state. It is prepared by the respective state government. 

________________ is an annual financial statement of the government.

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

  1. Report

  2. Budget

  3. Cash flow statement

  4. Funds flow statement

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Correct Option: B
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.  

The components of the budget are _______________ and __________________ budget.

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

  1. revenue and capital

  2. surplus and balanced

  3. tax and non tax

  4. none of the above

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Correct Option: A
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.

The financial year or fiscal year in India is  ________________.

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

  1. 1st April to 31st March

  2. 1st March to 31st May

  3. 1st December to 31st March

  4. none of the above

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Correct Option: A
Explanation:

In India, the financial year or the fiscal year is from 1st April of a year to 31st March of the next year. All the government budget and policies are framed according to the fiscal year. 

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

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

  1. State

  2. Union

  3. Revenue

  4. Capital

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Correct Option: B
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. 

What is required to derive the slope of the budget line?

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

  1. Amount of  price change in good 1 and good 2

  2. Amount of quantity changed in good 1 and good 2

  3. Amount of income change

  4. None of the above

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Correct Option: A
Explanation:

The slope of the budget line is the is the ratio of the prices of good 1 and good 2.  Hence, the other 3 options are invalid as slope of budget line is only related to the prices of the two goods with a fixed income.

What happens to the budget line when consumer income increases but the price of goods remains unchanged?

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

  1. Parallel upwards shift

  2. Parallel downwards shift

  3. Shift only on the x axis

  4. Shift only on the y-axis

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Correct Option: A
Explanation:

Greater the income with same prices would mean that the consumer can purchase more of both the goods on the budget line.

The other name of price line is ________.

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

  1. price opportunity line

  2. price-income line or budget line

  3. budget constraint line

  4. all of the above

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Correct Option: D
Explanation:

All points on the budget lines are points of optimal efficiency. Wherein the consumer is maximizing his utility by utilizing his entire income.  Points above the budget line are not attainable as it requires greater income. 

Therefore the answer is all of the above.

Price line indicates __________.

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

  1. all possible combination for the consumer to buy with given income and prices of the two commodities

  2. all possible combination for the consumer to buy with given income and prices of the single commodity

  3. income of the consumer

  4. prices of related commodities

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Correct Option: A
Explanation:

All points on the budget lines are points of optimal efficiency. Wherein the consumer is maximizing his utility by utilizing his entire income.  Points above the budget line are not attainable as it requires greater income.