This quiz works best with JavaScript enabled. Home > Cbse > Class 12 > Commerce > Economics Macro Economics > Class 12 Economics (Macro Economics) Chapter 5 Government Budget And The Economy – Quiz 3 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Economics (Macro Economics) Chapter 5 Government Budget And The Economy Quiz 3 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. What is the period of a fiscal year?(A) 1 April to 31 March(B) 1 January to 31 December(C) 1 March to 28 February(D) None of these A) 1 April to 31 March. B) 1 Jan to 31 December. C) 1 March to 28 February. D) None of these. Show Answer Correct Answer: A) 1 April to 31 March. 2. Which type of Budget occurs when the total expenditure of the government is equal to the total receipts? A) Primary Budget. B) Deficit Budget. C) Surplus Budget. D) Balanced Budget. Show Answer Correct Answer: D) Balanced Budget. 3. What is the formula for the tax multiplier? A) C / (1-c). B) -1 / (1-c). C) -c / (1-c). D) 1 / (1-c). Show Answer Correct Answer: C) -c / (1-c). 4. Tax that imposed on value added at the various stages of production is known as A) Corporate profit tax. B) Direct personal tax. C) Value added tax. D) None of these. Show Answer Correct Answer: C) Value added tax. 5. What is the primary purpose of a government budget? A) To increase taxes. B) To show planned receipts and payments. C) To reduce public spending. D) To promote private sector investment. Show Answer Correct Answer: B) To show planned receipts and payments. 6. Fill in the blank:The formula for the change in income ($\Delta$Y) when there is a change in government expenditure ($\Delta$G) is given by $\Delta$Y = ..... A) $\Delta$Y = c / (1-t) $\Delta$G. B) $\Delta$Y = (1-c) $\Delta$G. C) $\Delta$Y = 1 / [1-c(1-t)] $\Delta$G. D) $\Delta$Y = 1 / (1 + c-t) $\Delta$G. Show Answer Correct Answer: C) $\Delta$Y = 1 / [1-c(1-t)] $\Delta$G. 7. The same fiscal measures can give rise to a large or small deficit, depending on which factor? A) The size of the government building. B) The color of currency notes. C) The state of the economy. D) The number of fiscal years. Show Answer Correct Answer: C) The state of the economy. 8. Budget speech in Lok Sabha is given by: A) Finance Minister. B) Home Minister. C) President. D) Prime Minister. Show Answer Correct Answer: A) Finance Minister. 9. Receipts which do not affect asset or liability status of the govt. A) Revenue receipts. B) Capital receipts. C) Budgetary receipts. D) None of these. Show Answer Correct Answer: A) Revenue receipts. 10. What does fiscal deficit indicate? A) Surplus in government budget. B) Excess of revenue over expenditure. C) Balance between income and expenditure. D) Total borrowing requirements of the government. Show Answer Correct Answer: D) Total borrowing requirements of the government. 11. Which of the following is a component of Capital Expenditures in the Government Budget? A) Expenditure on acquiring land for road and constructing building. B) Salaries of government employees. C) Subsidies. D) Interest Payment. Show Answer Correct Answer: A) Expenditure on acquiring land for road and constructing building. 12. Fill in the blank:If some private savers decide to buy government bonds, the funds remaining to be invested in private hands will be ..... A) Smaller. B) Unchanged. C) Larger. D) Doubled. Show Answer Correct Answer: A) Smaller. 13. Which of the following is not a Revenue Receipt? A) Foreign grants. B) Profits of public enterprises. C) Recovery of loans. D) Wealth tax. Show Answer Correct Answer: C) Recovery of loans. 14. Which of the following statements is true according to the passage? A) GST is a single comprehensive indirect tax. B) GST is a direct tax. C) GST is only applicable to services. D) GST is not applicable throughout the country. Show Answer Correct Answer: A) GST is a single comprehensive indirect tax. 15. What does the term 'Government Budget' refer to? A) Estimation of total GDP growth of the country. B) Estimation of total population in the country. C) Estimation of total exports and imports of the country. D) Estimation of total receipts and total expenditure of the government for the next fiscal year. Show Answer Correct Answer: D) Estimation of total receipts and total expenditure of the government for the next fiscal year. 16. Primary deficit indicates the government's inability to meet its regular and recurring expenditure. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 17. Fill in the blank:The main items of non-plan expenditure are interest payments, defence services, subsidies, salaries and ..... A) Pensions. B) Exports. C) Loans. D) Taxes. Show Answer Correct Answer: A) Pensions. 18. Which function of the government budget aims to reduce income inequality? A) Re-distribution of Income. B) Economic Stability. C) Economic Growth. D) Re-allocation of Resources. Show Answer Correct Answer: A) Re-distribution of Income. 19. Which is included in the direct tax? A) Income tax. B) Gift tax. C) Both of these. D) Excuse duty. Show Answer Correct Answer: C) Both of these. 20. What is the primary objective of the government budget regarding economic growth? A) To increase government spending without limits. B) To reduce taxes for all. C) To mobilize resources for investment. D) To eliminate all forms of taxation. Show Answer Correct Answer: C) To mobilize resources for investment. 21. The budget may include: A) Revenue Deficit. B) Fiscal Deficit. C) Primary Deficit. D) All of these. Show Answer Correct Answer: D) All of these. 22. Public goods are non-excludable and non-rivalrous. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 23. How many types of revenue receipts are there? A) 6. B) 4. C) 3. D) 2. Show Answer Correct Answer: D) 2. 24. What does non-plan expenditure refer to? A) Expenditure on public goods. B) Expenditure on current five-year plan projects. C) Expenditure on routine government functions. D) Expenditure on developmental projects. Show Answer Correct Answer: C) Expenditure on routine government functions. 25. Which is the component of budget receipts? A) Revenue receipts. B) Capital receipts. C) Both of these. D) None of these. Show Answer Correct Answer: C) Both of these. 26. What is the financial year duration in India? A) 1 January to 31 December. B) 1 July to 30 June. C) 1 June to 31 May. D) 1 April to 31 March. Show Answer Correct Answer: D) 1 April to 31 March. 27. Fill in the blank:Gross primary deficit = Gross fiscal deficit ..... A) Fiscal transfers. B) Net interest liabilities. C) Revenue receipts. D) Capital expenditure. Show Answer Correct Answer: B) Net interest liabilities. 28. While financing a deficit, under which measure government can print more currency: A) Deficit financing. B) Disinvestment. C) By issuing bonds. D) None of them. Show Answer Correct Answer: A) Deficit financing. 29. The relationship between the revenue deficit and the fiscal deficit is that: A) Revenue deficit is a part of the fiscal deficit. B) Fiscal deficit is a part of the revenue deficit. C) Revenue deficit and fiscal deficit are always equal. D) There is no relationship between revenue deficit and fiscal deficit. Show Answer Correct Answer: A) Revenue deficit is a part of the fiscal deficit. 30. Which statement(s) is/are correct regarding capital expenditure? A) They create liability. B) They create assets. C) They reduce liability. D) They reduce assets. E) They create assets and (or) reduce liability. Show Answer Correct Answer: E) They create assets and (or) reduce liability. 31. What is the nature of revenue expenditure? A) Irregular and non-recurring. B) Creates assets for the government. C) Recurring and regular. D) Involves borrowing. Show Answer Correct Answer: C) Recurring and regular. 32. Repayment of loan is A) Revenue receipts. B) Capital receipts. C) Capital expenditure. D) Revenue expenditure. Show Answer Correct Answer: C) Capital expenditure. 33. Which of the following is a part of the revenue expenditure in the indian government budget? A) Intreast payment. B) Defence Purchase. C) Wage bill of the Government. D) All of these. Show Answer Correct Answer: D) All of these. 34. Which of the fololowing are the objective of government budget? A) Distrtibution of Income nd wealth. B) Economic stability. C) GDP growth. D) All of these. Show Answer Correct Answer: D) All of these. 35. What does a deficit budget indicate? A) Expenditures are equal to receipts. B) There is no budget deficit. C) Expenditures are less than receipts. D) Expenditures are greater than receipts. Show Answer Correct Answer: D) Expenditures are greater than receipts. 36. Construction of flyover is a capital expenditure of the government. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 37. Revenue expenditure and capital expenditure can be distinguished as follows: A) Revenue expenditure is for day-to-day operations, while capital expenditure is for acquiring or improving fixed assets. B) Revenue expenditure is for acquiring fixed assets, while capital expenditure is for daily expenses. C) Both revenue and capital expenditure are only for purchasing inventory. D) Revenue expenditure and capital expenditure are the same. Show Answer Correct Answer: A) Revenue expenditure is for day-to-day operations, while capital expenditure is for acquiring or improving fixed assets. 38. What is the purpose of public goods? A) To generate profit for private companies. B) To be consumed by individuals only. C) To be available for all members of society. D) To create competition in the market. Show Answer Correct Answer: C) To be available for all members of society. 39. If Primary deficit is rupees 3500 and interest payment is rupees 500, then Fiscal Deficit = A) 4000. B) 4200. C) 4100. D) 2900. Show Answer Correct Answer: A) 4000. 40. What is the primary function of the government in managing public resources? A) To ensure equitable distribution of resources. B) To maximize profits for private entities. C) To minimize government intervention. D) To promote monopolies in the market. Show Answer Correct Answer: A) To ensure equitable distribution of resources. 41. What is a public good? A) A good that is rivalrous. B) A good that is excludable. C) A good that is non-rivalrous and non-excludable. D) A good that is only available to the wealthy. Show Answer Correct Answer: C) A good that is non-rivalrous and non-excludable. 42. How does the government redistribute income? A) By imposing taxes on the poor. B) By giving subsidies to the rich. C) By eliminating all taxes. D) By imposing taxes on rich people. Show Answer Correct Answer: D) By imposing taxes on rich people. 43. The claim of the government on the property of a person who dies without making a will or leaving behind any legal heir. A) Penalties. B) Escheat. C) Special Assessment. D) Challan. Show Answer Correct Answer: B) Escheat. 44. Revenue expenditure A) Reduces liability of the government. B) Does not create any asset for the government. C) Is non-recurring expenditure. D) Increases productive capacity of the economy. Show Answer Correct Answer: B) Does not create any asset for the government. 45. In which of the following ways, can deficit in budget be financed? A) Borrowings from RBI. B) Borrowing from public. C) Borrowing from IMF. D) All of the above. Show Answer Correct Answer: D) All of the above. 46. There is a feasible way of excluding anyone from enjoying the benefits of public goods. A) TRUE. B) FALSE. C) All the above. D) None of the above. Show Answer Correct Answer: B) FALSE. 47. Which of the following is an example of a direct tax? A) Excise duty. B) Income tax. C) Sales tax. D) Service tax. Show Answer Correct Answer: B) Income tax. 48. FINANCIAL YEAR IN INDIA IS A) APRIL 1 TO MARCH 31. B) JANUARY 1 TO DECEMBER 31. C) OCTOBER 1 TO SEPTEMBER 30. D) NONE OF THE ABOVE. Show Answer Correct Answer: A) APRIL 1 TO MARCH 31. 49. A tax, the burden of which can be shifted on others, is called: A) Indirect tax. B) Direct tax. C) Wealth tax. D) None of the above. Show Answer Correct Answer: A) Indirect tax. 50. Fill in the blank:Cutting back government programmes in vital areas like agriculture, education, health, poverty alleviation, etc. would ..... affect the economy. A) Adversely. B) Positively. C) Neutrally. D) Barely. Show Answer Correct Answer: A) Adversely. 51. Identify which of the following statement is true? A) Fiscal deficit is difference between planned revenue expenditure and planned revenue receipts. B) Fiscal deficit is difference between total planned expenditure and total planned receipts. C) Primary deficit is the difference between total planned receipt and interest payment. D) Fiscal deficit is the sum of primary deficit and interest payment. Show Answer Correct Answer: D) Fiscal deficit is the sum of primary deficit and interest payment. 52. Which type of Budget occurs when the total expenditure of the government is less than the total receipts? A) Deficit Budget. B) Primary Budget. C) Surplus Budget. D) Balanced Budget. Show Answer Correct Answer: C) Surplus Budget. 53. According to the text, what is the effect of a decrease in taxes on the propensity to consume? A) A decrease in taxes works in effect like an increase in propensity to consume. B) A decrease in taxes reduces the propensity to consume. C) A decrease in taxes has no effect on the propensity to consume. D) A decrease in taxes leads to a decrease in overall consumption. Show Answer Correct Answer: A) A decrease in taxes works in effect like an increase in propensity to consume. 54. What is an economy called in which there is both the private sector and the Government? A) Mixed economy. B) Command economy. C) Traditional economy. D) Subsistence economy. Show Answer Correct Answer: A) Mixed economy. 55. Identify the revenue receipts from the following A) Receipt from sale of shares of a public sector undertaking. B) Borrowing from public. C) Loans from the world bank. D) Interest received on loans. Show Answer Correct Answer: D) Interest received on loans. 56. The capital account of the government budget is also called the ..... A) Fiscal deficit. B) Capital budget. C) Revenue budget. D) Current account. Show Answer Correct Answer: B) Capital budget. 57. 'Policies of surplus budget during inflation' is a part of which objective of government budget A) Economic growth. B) Economic stability. C) Reducing regional disparities. D) Reallocation of resources. Show Answer Correct Answer: B) Economic stability. 58. Budget is presented by A) Chief Minister. B) Prime Minister. C) Home Minister. D) Finance Minister. Show Answer Correct Answer: D) Finance Minister. 59. What is one objective of the Government Budget? A) To eliminate all taxes. B) To increase tax evasion. C) To allocate resources according to priorities. D) To reduce public services. Show Answer Correct Answer: C) To allocate resources according to priorities. 60. Fill in the blank:Public goods, as distinct from private goods, are collectively ..... A) Produced. B) Consumed. C) Owned. D) Regulated. Show Answer Correct Answer: B) Consumed. ← PreviousNext →Related QuizzesCommerce QuizzesClass 12 QuizzesClass 12 Economics (Macro Economics) Chapter 5 Government Budget And The Economy Quiz 1Class 12 Economics (Macro Economics) Chapter 5 Government Budget And The Economy Quiz 2Class 12 Economics (Macro Economics) Chapter 5 Government Budget And The Economy Quiz 4Class 12 Economics (Macro Economics) Chapter 1 Introduction QuizClass 12 Economics (Macro Economics) Chapter 2 National Income Accounting QuizClass 12 Economics (Macro Economics) Chapter 3 Money And Banking QuizClass 12 Economics (Macro Economics) Chapter 4 Determination Of Income And Employment QuizClass 12 Economics (Macro Economics) Chapter 6 Open Economy Macroeconomics Quiz 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books