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Class 12 Economics (Macro Economics) Chapter 5 Government Budget And The Economy Quiz 4 (25 MCQs)

Quiz Instructions

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1. Which of the following is an objective of Government Budget?

Correct Answer: A) Balanced regional growth.

2. Disinvestment by govt. means:

Correct Answer: D) All the above.

3. If primary deficit is Rs. 3500 and interest payment is Rs. 500, then fiscal deficit is:

Correct Answer: B) 4000.

4. Fill in the blank:The budget is not merely a statement of receipts and expenditures. Since Independence, with the launching of the ..... Plans, it has also become a significant national policy statement.

Correct Answer: A) Five-Year.

5. Fill in the blank:The central government shall not borrow from the Reserve Bank of India except by way of advances to meet temporary excess of cash disbursements over .....

Correct Answer: A) Cash receipts.

6. Which is a component of Budget Receipts

Correct Answer: C) Both (a) and (b).

7. Public goods must be provided by the government because:

Correct Answer: A) They are non-excludable and non-rivalrous, making private provision inefficient.

8. Subsidies are offered by government:

Correct Answer: D) Both (a) and (b).

9. The proportional income tax acts as an automatic stabiliser by making disposable income and consumer spending less sensitive to fluctuations in GDP.

Correct Answer: A) True.

10. The primary deficit in a government budget will be zero, when .....

Correct Answer: D) Fiscal deficit is equal to interest payment.

11. The non tax revenue in the following is:

Correct Answer: C) Dividends.

12. Borrowing in the government budget is:

Correct Answer: B) Fiscal deficit.

13. What is the main purpose of Revenue Expenditures in the Government Budget?

Correct Answer: D) Expenses that do not create any asset nor reduce the liability of the government.

14. Which one of the following is an indirect tax?

Correct Answer: B) Excise duty.

15. According to the Fiscal Responsibility and Budget Management Act, 2003 (FRBMA), what is the maximum fiscal deficit as a percentage of GDP that the central government must aim for?

Correct Answer: A) 3 percent.

16. What is a balanced budget?

Correct Answer: B) When expenditures equal revenues.

17. The Reserve Bank of India must not subscribe to the primary issues of central government securities from the year 2006-07.

Correct Answer: A) True.

18. Deficit budget refers to that situation in which governments budget expenditure is-

Correct Answer: B) More than its budget receipts.

19. What are the two aspects of Budgetary policy?

Correct Answer: A) Revenue aspect and expenditure aspect.

20. Which of the following is a component of Revenue Expenditures in the Government Budget?

Correct Answer: B) Interest Payment.

21. What distinguishes Capital Expenditures from Revenue Expenditures in the Government Budget?

Correct Answer: A) Capital Expenditures are for long-term investments, while Revenue Expenditures are for day-to-day expenses.

22. What is the significance of Revenue Receipts in the Government Budget?

Correct Answer: A) Generating income for the government through taxes and other sources.

23. FOLLOWING IS AN EXAMPLE OF DIRECT TAX

Correct Answer: C) INCOME TAX.

24. Electricity tax is levied by the State Government

Correct Answer: A) TRUE.

25. What is the formula for Gross fiscal deficit as given in the text?

Correct Answer: A) Gross fiscal deficit = Total expenditure-(Revenue receipts + Non-debt creating capital receipts).

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