Tag: government budget and economy

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Questions Related to government budget and economy

Multiple choice business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

A __________ budget is useful during periods of high inflation.

  1. deficit

  2. balanced

  3. suprlus

  4. zero-based
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Surplus Budget is the type of budget where the expected government revenue is greater than expected government expenditure due to which there is a surplus in the budget. Surplus budget is regarded as a positive indicator for the economy as it can be used during inflation through increased revenue that can soak liquidity from the economy and decrease the purchasing power. 

Multiple choice business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

A deficit budget leads to an increase in the liability of the government or a decrease in its reserves.

  1. True

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

Deficit budget is the type of budget where the estimated government expenditure is greater than the estimated government revenue due to which there is a deficit in the budget. Deficit budget is usually regarded as a negative indicator for the economy as it increases the liability of the government or decreases the reserves of the government. 

Multiple choice business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

Which of the following is a component of the capital budget?

  1. Capital receipts

  2. Revenue expenditure

  3. Capital expenditure

  4. Both A & C
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Capital budget are the money receipts or payments that lead to decrease or increase in the value of asset and liability of the government. It is divided into two heads 

1. Capital receipts- Capital receipts are all those money receipts of the government that either creates a liability for the government or reduce an asset of the government.
2. Capital expenditure - Capital expenditure are all those expenditure of the government that either creates an asset for the government or reduce the liability of the government. For example - Expenditure on land and building, purchase of shares etc.

Multiple choice business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

A deficit budget proves to be useful during the periods of ____________.

  1. inflation

  2. high employment

  3. depression

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

Deficit budget is the type of budget where the estimated government expenditure is greater than the estimated government revenue due to which there is a deficit in the budget. Deficit budget is usually regarded as a negative indicator for the economy but it is regarded to be useful at the time of depression in the economy as it results in reduced taxes or increased public expenditure that resolves the situation of the depressed economy. 

Multiple choice business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

Government budget comprises of which of the following?

  1. Revenue budget

  2. Capital budget

  3. Administration budget

  4. Both A & B
Reveal answer Fill a bubble to check yourself
D 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. Revenue budget - These are the money receipts or payments that does not lead to decrease or increase in the value of asset and liability of the government. 

2. Capital budget - These are the money receipts or payments that lead to decrease or increase in the value of asset and liability of the government. 

Multiple choice business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

A surplus budget is useful in correcting inflationary gap by lowering the level of _____________.

  1. taxation

  2. effective demand

  3. aggregate supply

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


Surplus Budget is the type of budget where the expected government revenue is greater than expected government expenditure due to which there is a surplus in the budget. Surplus budget is regarded as a positive indicator for the economy as it can be used during inflation through increased revenue receipts by increasing taxes or through reduction in revenue expenditure by reducing public expenditure that can soak liquidity from the economy and decrease the purchasing power that results in fall of effective demand in the economy.

Multiple choice business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

Revenue receipts of the government are classified into:

  1. Tax revenue and borrowings

  2. Tax and non-tax revenue

  3. Borrowings and recovery of loans

  4. Non-tax revenue and recovery of loans
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

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. These basically includes tax and non-tax revenue received by the government from the general public. 

Multiple choice business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

Tax revenue is the main source of regular receipts of the government.

  1. True

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

Tax revenue are the money receipts of the government by the general public for the basic services which the public is availing from the government. These receipts are recurring in nature and it is an obligation for all the civilians of a country to pay tax. 

Multiple choice business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

Capital receipts are regular and recurring in nature.

  1. True

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

False. 

Capital receipts are all those money receipts of the government that either create a liability for the government or reduce an asset of the government. These receipts are not recurring in nature as it is related to the valuation of assets and liabilities of the government. 

Multiple choice business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

Which of these is major component of external debt?

  1. Short term debt

  2. Long term debt

  3. Commercial borrowings

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

External debt is the portion of a country's debt that was borrowed from foreign lenders, including commercial banks, governments, or international financial institutions. These loans, including interest, must usually be paid in the currency in which the loan was made.