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Class 12 Economics (Macro Economics) Chapter 5 Government Budget And The Economy Quiz 2 (25 MCQs)

Quiz Instructions

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1. Which one of the following is not an objective of government budget?

Correct Answer: C) Increasing regional disparities.

2. What is the main objective of the government budget?

Correct Answer: A) To increase the welfare of the people by intervening in the economy.

3. Which of the following is NOT an objective of the government budget?

Correct Answer: D) Increasing unemployment.

4. Which of the following is an example of direct tax?

Correct Answer: D) WEALTH TAX.

5. What does the Revenue Budget include?

Correct Answer: B) Revenue receipts and revenue expenditure.

6. Fill in the blank:Interest payments on market loans, external loans and from various reserve funds constitute the single largest component of ..... revenue expenditure.

Correct Answer: A) Non-plan.

7. The role of built-in stabilisers in the economy during boom and slump years is to:

Correct Answer: A) Automatically moderate fluctuations in economic activity.

8. Which of the following is an example of capital expenditure?

Correct Answer: D) Purchase of machinery.

9. Which of following is diret tax?

Correct Answer: A) Income tax.

10. Fill in the blank:The three functions of allocation, redistribution and stabilisation operate through the ..... and receipts of the government.

Correct Answer: A) Expenditure.

11. What is the period of a fiscal year?

Correct Answer: A) 1 april to 31 march.

12. Which one of them is direct tax?

Correct Answer: A) Income tax.

13. What is the purpose of Public Expenditure in the Government Budget?

Correct Answer: A) Expenses incurred by the government for the maintenance of the government and welfare of the society.

14. Given the formula for the change in equilibrium income for a change in transfers:$\Delta$Y = (c / (1-c)) $\Delta$TR, what does 'c' represent in this formula?

Correct Answer: B) Marginal propensity to consume.

15. Which of the following budget is suitable for developing economies?

Correct Answer: A) Deficit Budget.

16. Law and order, national defense, sanitation, etc are

Correct Answer: C) Public goods.

17. Fill in the blank:The budget, which gives a statement of the receipts and expenditure of the government, is divided into the ..... budget and ..... budget.

Correct Answer: A) Revenue, capital.

18. Payment of salaries to the government employees is a capital payment.

Correct Answer: B) FALSE.

19. Which of the following is implication of fiscal deficit?

Correct Answer: D) All of these.

20. Which of the following is a non tax eceipts?

Correct Answer: C) Donations.

21. What is the main document of the government that presents the estimated receipts and expenditures for every financial year?

Correct Answer: A) Annual Financial Statement (main budget document).

22. The amount collected by the government as taxes and duties is known as .....

Correct Answer: B) Tax revenue receipts.

23. What are Revenue Receipts in the Government Budget?

Correct Answer: C) Receipts which do not create any liability or reduce the assets of the government.

24. When government spends more than it collects by way of revenue, it incurs .....

Correct Answer: B) Budget Deficit.

25. The three functions of allocation, redistribution, and stabilization are operated through the expenditure and receipts of the government.

Correct Answer: A) TRUE.

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