Case Based MCQs of Government Budget and the Economy class 12
Case Based MCQs of Government Budget and the Economy class 12
Let’s Practice
FM Niramala Sitharaman proposed a new optional personal income tax system and announced multi-billion dollar farm, infra, and a healthcare package to revive growth in the country, on Saturday. Emphasising on capacity building and empowerment of marginalised sections of the society while protecting the wealth creators, Sitharaman said this Budget will boost income and purchasing power of the people.
| Taxable Income slabs | Tax rates |
| Up to ₹ 5 lakh | Nil |
| ₹ 5 lakh to ₹ 7.5 lakh | 10% |
| ₹ 7.5 lakh to ₹ 10 lakh | 15% |
| ₹ 10 lakh to ₹ 12.5 lakh | 20% |
| ₹ 12.5 lakh to ₹ 15 lakh | 25% |
| Above ₹ 15 lakh | 30% |
To simplify the tax system and lower tax rates, around 70 of more than 100 income tax deductions and exemptions have been removed. Dividend distribution Tax (DDT) abolished; Companies will not be required to pay DDT; dividend to be taxed only at the hands of recipients, at applicable rates. 15% concessional tax rate for new power generation companies. 100% tax concession to sovereign wealth funds on investment in infrastructure projects.
Q. 1. What objective has been fulfilled by the Govt. of India through its Progressive Personal Income Tax Policy as highlighted in the given case?
(a) Reallocation of resources
(b) Redistribution of income
(c) Economic stability
(d) Economic growth
Ans – (b)
Q. 2 Personal Income Tax is a ________ .
(a) Direct tax
(b) Indirect tax
(c) Paper tax
(d) None of these
Ans – (a)
Q. 3. “15% concessional tax rate for new power generation companies. 100% tax concession to sovereign wealth funds on investment in infrastructure projects.” What objective of government budget has been highlighted in the above lines?
(a) Reallocation of resources
(b) Redistribution of income
(c) Economic stability
(d) None of these
Ans – (a)
Q. 4. Suggest the measure to control the rising revenue deficit of the government.
(a) Reduce the burden of subsidy
(b) Reduce government administrative expenses
(c) increase taxes
(d) All of these
Ans – (d)
Case Study – 2
10 major highlights of Budget 2020
- Empowering people to create wealth and boost purchasing power.
- Fundamentals of the economy are strong.
- GST brings 60 lakh new taxpayers.
- Three pillars of Union Budget 2020 – (i) Aspirational India. (ii) Economic development (iii) Caring society.
- Promoting Education in India – Finance minister has allocated a total of ₹ 99,300 crore to the education sector of India.
- National Infrastructure policy to spend ₹ 100 lakh crore over the next 5 years.
- Building Data centre parks and National Quantum Tech Plan.
- Developing the structure of tourism.
- Governance is key.
- Empowering the scheduled class and scheduled tribes – Government has allocated ₹ 85 K crore for the scheduled class and other backward classes for the year 2020-21 and ₹ 53,700 crore for the scheduled tribes.
Q. 5. Goods and Services Tax (GST) is a ____ tax.
(a) Direct
(b) Indirect
(c) Paper
(d) None of these
Ans – (b)
Q. 6. “GST brings 60 lakh new taxpayers. “What will be its likely effect on revenue deficit in government budget?
(a) Increase
(b) Decrease
(c) Constant
(d) None of these
Ans – (b)
Q. 7. “National Infrastructure policy to spend ₹ 100 lakh crore over the next 5 years.” Building Infrastructure facilities is a _ expenditure in a government budget.
(a) Revenue
(b) Capital
(c) Development
(d) Non development
Ans – (b), (c)
Q. 8. “Government has allocated ₹ 85k crore for the scheduled class and other backward classes for the year 2020-21 and ₹ 53,700 crore for the scheduled tribes.” What objective of government budget has been highlighted in the above lines?
(a0 Reallocation of resources
(b) Reduction of income inequalities
(c) Price stability
(d) Economic growth
Ans – (b)
Case Study – 3
Following is the data from the government budget of a hypothetical economy during a fiscal year:
| Particulars | Amount (in ₹ crores) |
| (i) Tax Revenue | 1,000 |
| (ii) Revenue Expenditure | 3,821 |
| (iii) Non-tax Revenue | 2,000 |
| (iv) Recovery of Loans | 135 |
| (v) Capital Expenditure | 574 |
| (vi) Disinvestment | 100 |
| (vii) Interest Payments | 1,013 |
Q. 9. How much is the revenue deficit of the economy?
(a) ₹ 1395 crores
(b) ₹ 821 crores
(c) ₹ 3247 crores
(d) ₹ None of these
Ans – (b)
Q. 10. How much is the fiscal deficit of the economy?
(a) ₹ 1160 crores
(b) ₹ 821 crores
(c) ₹ 3821 crores
(d) None of these
Ans – (a)
Q. 11. Suppose you are a member of the Advisory Committee to the Finance Minister of this economy. The finance Minister is concerned about the rising Revenue Deficit in the budget. Suggest any one measure to control the rising Revenue deficit of the government.
(a) To reduce government administrative expenses
(b) To reduce the burden of subsidy
(c) To increase taxation
(d) All of these
Ans – (d)
Q. 12. Which of the following is an example of non-debt creating capital receipts in a government budget?
(a) Interest receipts
(b) Disinvestment
(c) Recovery of loans
(d) Borrowings
Ans – (b), (c)
Case Study – 4
Following is the data from the government budget of a hypothetical economy during a fiscal year:
| Particulars | Amount (in ₹ crores) |
| (i) Non-tax Revenue | 2,000 |
| (ii) Tax Revenue | 1,200 |
| (iii) Recovery of Loans | 145 |
| (iv) Other Revenue Expenditure | 2,630 |
| (v) Capital Expenditure | 500 |
| (vi) PSU Disinvestment | 120 |
| (vii) Interest Payments | 1,070 |
Q. 13. How much is the revenue deficit of the economy?
(a) ₹ 500 crores
(b) ₹ 735 crores
(c) ₹ 570 crores
(d) None of these
Ans – (a)
Q. 14. How much is the fiscal deficit of the economy?
(a) ₹ 500 crores
(b) ₹ 735 crores
(c) ₹ 570 crores
(d) ₹ None of these
Ans – (b)
Q. 15. PSU Disinvestment is a ______ receipt of the government.
(a) Revenue
(b) Capital
(C) Both (a) and (b)
(d) None of these
Ans – (b)
Q. 16. Recovery of Loans is example of _______ in a government budget.
(a) Revenue receipts
(b) Debt creating capital receipts
(c) Non-debt creating capital receipts
(d) None of these
Ans – (c)
