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

Which of the following is/are correct about India's present fiscal situation?
1. Aggregate tax to GDP ratio of India is around 17 per cent.
2. The tax to GDP ratio of the Government of India (GoI) is around 10 per cent.
3. The tax to GDP ratio of the GoI falls to around 6.5 per cent after devolution to states.

  1. Only 1

  2. Only 2

  3. 1 and 2

  4. 1,2 and 3
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

These figures represent the standard estimates for India's tax-to-GDP ratio. The aggregate ratio includes both center and state taxes, while the center's share is lower, and it decreases further after the constitutional devolution of funds to states.

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

In comparison to revenue deficit, the size of fiscal deficit is always _____.

  1. higher

  2. smaller

  3. similar

  4. uncertain
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The fiscal deficit is the difference between the total revenue and total expenditure of the government. Revenue deficit hence arises when the government's actual net receipts is lower than the projected receipts. So, the size of fiscal deficit is always higher than revenue deficit.

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

Pick out the item which is not a part of non-plan expenditure on the revenue side.

  1. Defence

  2. Central Assistance to states

  3. Subsidies

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

Central assistance to states is not a part of non-plan expenditure on the revenue side. Non-plan revenue expenditure is accounted for by interest payments, subsidies (mainly on food and fertilisers), wage and salary payments to government employees, grants to States and Union Territories governments, pensions, police, economic services in various sectors, other general services such as tax collection, social services, and grants to foreign governments. 

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

Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment is called ________.

  1. capital expenditure

  2. revenue expenditure

  3. both A and B

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

Capital expenditure are funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment. It is often used to undertake new projects or investments by the firm. 

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

 Bharat Nirman, MGNREGA are examples of _______.

  1. plan expenditure

  2. non-plan expenditure

  3. capital expenditure

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

Bharat Nirman and MGNREGA were flagship government schemes funded under the Plan Expenditure category, which focused on developmental goals and infrastructure creation during the Five-Year Plan era.

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

Pick out the item which is not a part of the plan expenditure.

  1. Agriculture

  2. Industry

  3. Social Services

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

Plan expenditure is essentially the budget support to the Central Plan and the Central assistance to State and Union Territory plans. Like all budget heads, this is also split into revenue and capital components. Defense is not part of plan expenditure.

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

Capital expenditure is categorised as ________.

  1. planned

  2. unplanned

  3. both A and B

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

Any expenditure that is incurred on programmes which are detailed to state for their plans is called planned expenditure. The estimated expenditure provided in the budget for spending during the year on routine functioning of the government is unplanned expenditure. So capital expenditure comprises both.

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

The difference between total expenditure and total receipts is ______.

  1. fiscal deficit

  2. budget deficit

  3. primary deficit

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

The budget deficit is the difference between current government's spending on goods and services and total current revenue from all types of taxes net of transfer payments.