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Class 12 Commerce Government Budget and the Economy — practice questions

Explore 13 free Government Budget and the Economy questions in Class 12 Commerce Economics. Open each question or exercise to read its content, reference answers and available explanation.

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Government Budget and the Economy questions and exercises with answers

Showing questions 1–13 of 13.

A government budget is an annual statement of the estimated ___ of the government over a financial year:Read the answer and worked solution →Receipts that neither create a liability nor reduce the assets of the government are called:Read the answer and worked solution →Receipts that either create a liability or reduce assets, such as borrowings, are called:Read the answer and worked solution →A tax whose burden (incidence and impact) falls on the same person and cannot be shifted, like income tax, is a:Read the answer and worked solution →A tax whose burden can be shifted to another person, like the Goods and Services Tax, is an:Read the answer and worked solution →The excess of total expenditure over total receipts excluding borrowings is the:Read the answer and worked solution →The excess of revenue expenditure over revenue receipts is the:Read the answer and worked solution →Fiscal deficit minus interest payments gives the:Read the answer and worked solution →A budget in which estimated receipts are equal to estimated expenditure is called a:Read the answer and worked solution →Expenditure that neither creates assets nor reduces liabilities of the government is:Read the answer and worked solution →The allocation function of the government budget refers to the:Read the answer and worked solution →Borrowing by the government is treated as a capital receipt because it:Read the answer and worked solution →The redistribution function of the budget mainly aims at:Read the answer and worked solution →

Worked practice questions

A government budget is an annual statement of the estimated ___ of the government over a financial year:

  1. exports and imports
  2. receipts and expenditure
  3. assets and liabilities
  4. profits and losses
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Correct answer: B. receipts and expenditure

The budget estimates the government's receipts and expenditure for a financial year.

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Receipts that neither create a liability nor reduce the assets of the government are called:

  1. disinvestment receipts
  2. revenue receipts
  3. capital receipts
  4. borrowings
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Correct answer: B. revenue receipts

Revenue receipts neither create liabilities nor reduce assets (e.g. taxes).

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Receipts that either create a liability or reduce assets, such as borrowings, are called:

  1. capital receipts
  2. revenue receipts
  3. grants
  4. tax receipts
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Correct answer: A. capital receipts

Capital receipts create a liability (borrowing) or reduce assets (disinvestment).

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