alleryStart learning →Three of these claims are false. Remove them.
Read exercise and reference answers
- Questions
- Question
- Three of these statements about government receipts are false.
- Choices
- Item
- Borrowings are capital receipts
- Correct
- Yes
- Explanation
- Borrowing creates a liability, so it is a capital receipt.
- Item
- Borrowings are revenue receipts
- Explanation
- GST is levied on supply and passed on, so it is indirect.
- Item
- GST is a direct tax
- Explanation
- Wealth tax falls on the person assessed, so it is direct.
- Item
- Wealth tax is an indirect tax
- Question
- Three of these statements about deficits are false.
- Choices
- Item
- Primary deficit excludes interest
- Correct
- Yes
- Explanation
- Fiscal deficit includes interest payments; the primary one strips them out.
- Item
- Fiscal deficit excludes interest
- Explanation
- Revenue deficit covers revenue items only.
- Item
- Revenue deficit includes capital spending
- Explanation
- Fiscal deficit is precisely the borrowing requirement.
- Item
- Fiscal deficit ignores borrowing
- Instructions
- Three claims are false. Leave the true one standing.
Borrowings create a liability, so they are capital receipts, never revenue.
GST is levied on goods and services, making it indirect, while wealth tax falls on the holder, making it direct.
Primary deficit is precisely fiscal deficit minus interest.
fiscal deficit still contains that interest, revenue deficit is confined to the revenue account, and fiscal deficit is the measure of borrowing need rather than something that ignores it.