CBSE Class 12 (Arts) Government Budget and the Economy — practice questions
92 free MCQs with worked solutions. Tap any question for the answer + explanation, or practice them all in the app.
Practice CBSE Class 12 (Arts) Government Budget and the Economy in the app →A government budget is an annual statement of the estimated ___ of the government over a financial year:Receipts that neither create a liability nor reduce the assets of the government are called:Receipts that either create a liability or reduce assets, such as borrowings, are called:A tax whose burden (incidence and impact) falls on the same person and cannot be shifted, like income tax, is A tax whose burden can be shifted to another person, like the Goods and Services Tax, is an:The excess of total expenditure over total receipts excluding borrowings is the:The excess of revenue expenditure over revenue receipts is the:Fiscal deficit minus interest payments gives the:A budget in which estimated receipts are equal to estimated expenditure is called a:Expenditure that neither creates assets nor reduces liabilities of the government is:The allocation function of the government budget refers to the:Borrowing by the government is treated as a capital receipt because it:The redistribution function of the budget mainly aims at:Which Article of the Constitution requires the Union Budget to be presented to Parliament?The financial year in India for budget purposes runs between which dates?The main budget document is officially called theIn the government budget, the account dealing with assets and liabilities is called theAltering the distribution of income through taxes and transfers is which function of the budget?Providing goods that the market mechanism cannot supply is the budget'sCorrecting fluctuations in income and employment is the budget'sPick the item that counts as a public good.One person enjoying a public park does not reduce its availability to others. This property isWhy can a seller not charge for a public good such as clean air?People who enjoy a public good without paying for it are known asGoods financed through the budget and used without direct payment reflectWhen the government itself directly produces a good, this is calledIf private demand cannot fully employ resources, the government shouldWhen excess demand at high employment threatens inflation, policy shouldRevenue receipts are those thatIn terms of repayment, revenue receipts are termedWhich of the following is an indirect tax?Which tax is a duty levied on goods produced within the country?Which of these direct taxes brought in little revenue and was dubbed a 'paper tax'?Which kind of income taxation is used to pursue the redistribution objective?Under progressive income taxation, as a person's income rises the tax rateOn what basis are firms taxed on their profits?How are the necessities of life treated under excise taxes?Which one counts as non-tax revenue of the Centre?The proposals for imposing or altering taxes are detailed in theWhich of the following is a capital receipt of the government?What defines a capital receipt?Selling shares of Public Sector Undertakings is known asSpending that does not create physical or financial assets for the government isSpending on acquiring land, buildings and machinery is classified asThe single largest component of non-plan revenue expenditure isWhy is defence expenditure called committed expenditure?Plan revenue expenditure relates to which of the following?Which of these is a main item of non-plan expenditure?Grants given to state governments are treated asWhich Act mandates the Medium-term Fiscal Policy Statement along with other policy statements?Which FRBM statement assesses GDP growth and balances?The Fiscal Policy Strategy Statement is meant toA gender budgeting statement was first introduced in the Indian Budget ofGoods and Services Tax was implemented from which date?If a government spends exactly what it collects as revenue, the budget isWhen tax collection exceeds required expenditure, the budget is said to beRevenue deficit refers to the excess ofRevenue receipts are Rs 62,000 crore and revenue expenditure Rs 80,000 crore. Revenue deficit isA revenue deficit implies the government isFiscal deficit is the excess of total expenditure over total receiptsSpending Rs 5,00,000 cr, revenue receipts Rs 3,20,000 cr, non-debt capital receipts Rs 30,000 cr. Fiscal deficWhich are examples of non-debt creating capital receipts?What does the fiscal deficit indicate about government borrowing?The government borrows from banks indirectly through theA large share of revenue deficit in the fiscal deficit shows that borrowing is mostly used forPrimary deficit is obtained byFiscal deficit is Rs 90,000 crore and net interest payments are Rs 40,000 crore. The primary deficit isThe aim of measuring the primary deficit is to focus onKeynes argued that fiscal policy should be used to stabiliseTaxes that do not depend on income are calledTaxes lower household consumption because they reduceNational income is Rs 5,00,000, taxes Rs 60,000 and transfers Rs 20,000. Disposable income isGovernment purchases raise aggregate demand because they areWith MPC of 0.8, a Rs 100 increase in government spending (taxes fixed) raises output byWith MPC of 0.8, a lump-sum tax rise of Rs 100 reduces equilibrium income byIf a rise in government spending is matched by an equal tax rise, output rises byGovernment raises spending by Rs 250 crore and taxes by Rs 250 crore. Income rises byCompared with lump-sum taxes, a proportional income tax makes the spending multiplierWhy does a proportional income tax act as an automatic stabiliser?A deliberate change in government spending to offset a fall in investment is calledWhich of these also helps to stabilise income automatically?Built-in stabilisers dampen only part of fluctuations. The rest needsWhich method have governments mostly relied on to finance budget deficits?Deficits are a flow while government debt is aWho first argued that people save more when faced with high deficits, giving Ricardian equivalence?Under Ricardian equivalence, higher government dissaving from a deficit leads toGovernment bonds competing with corporate bonds for savings can push out private borrowers. This isDebt owed to foreigners is a real burden becauseWithout any change in fiscal policy, the budget deficit tends toA common criticism of deficits is that they areA high fiscal deficit need not be inflationary whenSince 1997-98, which deficit measure has no longer been shown in India's budget?