Tag: public finance, budget and fiscal policy

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Questions Related to public finance, budget and fiscal policy

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

Balance of payment on current account covers all receipts on account of earnings, borrowings and all payments on account of spending and lending. (true/false)

  1. True

  2. False

  3. Cant say

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

The current account specifically covers trade in goods, services, and unilateral transfers. Borrowings and lending are recorded in the capital account, not the current account.

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

In 1990-91, BOP position worsened because of ________.

  1. Gulf war

  2. deterioration in invisible remittances

  3. both above

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

The 1990-91 BOP crisis was exacerbated by the Gulf War, which caused oil prices to spike and reduced remittances from Indian workers in the Middle East.

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

___________ is the difference between total receipts and total expenditure.

  1. Fiscal deficit

  2. Budget deficit

  3. Revenue deficit

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

Budget deficit refers to the shortfall of revenues in comparison to the government expenditure. It can be measured as the difference between Total Receipts and Total Expenditure.

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

What is the budgetary deficit?

  1. It is the difference between all receipts and expenditure.

  2. It is the difference between all expenditure and receipts.

  3. The difference between government loans and credits recovered.

  4. Government assets and liabilities.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A budgetary deficit occurs when the government's total expenditure exceeds its total receipts (revenue and capital).

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

In India, deficit can be financed by _________.

  1. borrowing from the RBI

  2. borrowing from the commercial banks

  3. issue of new currency

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

Deficit financing can be achieved through various means, including borrowing from the central bank (RBI), borrowing from commercial banks, or issuing new currency.

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.