100 Important MCQs of Government Budget and the Economy chapter Class 12

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Looking for important Multiple Choice Questions (MCQs) of Government Budget and the Economy Chapter of Macroeconomics of Class 12 CBSE Board and other State Board

I have made the collection of around 100 MCQs of Government Budget and The Economy units of economics class 12.

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Multiple Choice Questions of Government Budget and the Economy units of Macroeconomics Class 12

Following are the MCQs

Spot the Capital Receipt:

a) Tax Received
b) External grants received
c) Dividend received
d) Disinvestment

And -d)
capital receipts are those receipts which either reduces assets or increase liabilities. Disinvestment reduces assets

Spot the revenue receipt:-

a) Recovery of loans
b) Borrowings
c) External grants
d) Disinvestment

Ans – c)
Revenue receipts are the receipts which doesn not affects assets and liabilities. External grants does not change present status of assets and liabilities.

Fiscal deficit in a government budget refers to:-

a) Shortfall in taxes
b) Shortfall in disinvestment
c) Disinvestment requirement
d) Borrowings requirements

Ans – d)
Fiscal deficit shows the total borrowings requirement of a government in a fiscal (fianancial) year.

From the following data about a Government budget, find out Fiscal deficit:

Items(₹ in Crore)
i) Capital receipts net of borrowings95
ii) Revenue expenditure100
iii) Interest payments10
iv) Tax revenue60
v) Non-tax revenue20
vi) Capital expenditure110

Options

a) ₹20 crore
b) ₹35 crore
c) ₹25 crore
d) None of these

Ans – b)

From the following data about a government budget find Primary deficit:

Items(₹ in crore)
i) Revenue expenditure70000
ii) Borrowings15000
iii) Revenue receipts50000
iv) Interest payments25% of revenue deficit

Options

a) ₹15000 crore
b) ₹10000 crore
c) ₹20000 crore
d) None of these

Ans – b)

From the following data bout a government budget calculates Primary deficit:

items(₹ in crore)
i) Revenue deficit40
ii) Non-debt creating capital receipts190
iii) Tax Revenue125
iv) Capital Expenditure220
v) Interest payments20

Options

a) ₹70 crore
b) ₹50 crore
c) ₹450 crore
d) ₹10 crore

Ans – b)

Given the following data estimate the value of (Fiscal Deficit):

Items(₹ in crore)
i) Tax Revenue1,000
ii) Non-Tax Revenue150
iii) Net Borrowings by Government780
iv) Disinvestments Proceeds50
v) Revenue Expenditure1,500
vi) Capital Expenditure480

Options

a) ₹350
b) ₹980
c) ₹780
d) None of these

Ans – c)
Explanation:- Fiscal Deficit = Borrowing

The primary deficit in a government budget refers to:-

a) Borrowing requirements
b) Interest payments requirements
c) (a) less (b)
d) (a) + (b)

Ans – c)
The primary deficit represents the loan requirement of the government to meet only current year excess expenditure exluding the interest payment on accumulated loan.

Steps taken through the government budget can influence:-

a) Inequalities
b) Allocation of resources
c) Inflation
d) All the above

Ans – d)
Objective of the government budget is 1) Optimum allocation of resources, 2) Reduce inequilities of the income and 3) economic stability (Price stability)

Primary deficit in a government budget will be Zero, When_________

a) revenue deficit is zero
b) net interest payments are Zero
c) fiscal deficit is zero
d) fiscal deficit is equal to interest payment

Ans – d)
Primary deficit is the difference between the fiscal deficit and interest on accumulated loans. If fiscal deficit is equal to the interest payment, The primary deficit is zero

Fiscal Deficit equals

a) Interest Payments
b) borrowings
c) interest payments less borrowings
d) borrowings less interest payments

Ans – b)
Fiscal deficit show the borrowings requirements of the government

Primary Deficit equals

a) borrowings
b) interest payments
c) borrowings less interest payments
d) both borrowings and interest payments

Ans – c)
Primary deficit is the difference between borrowing (fiscal deficit) and the interest on accumulated profits

Primary deficit is the difference between

a) fiscal deficit and revenue deficit
b) revenue deficit and interest payments
c) total expenditure and total revenue receipts
d) fiscal deficit and interest payments

Ans -d)
Primary deficit is the difference between fiscal deficit (borrowing) and the interest payments on accumulated profits.

The primary deficit in a government budget is

a) revenue expendiutre – revenue receipts
b) total expenditure – total receipts
c) revenue defict – interest payments
d) fiscal deficit – interest payments

Ans – d)

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Borrowings in government budget are______

a) revenue deficit
b) fiscal deficit
c) primary deficit
d) deficit in taxes

Ans – b)

Which of the following statements is true?

a) Fiscal deficit is the difference between total expenditure and total receipts
b) Primary deficit is the difference between total receipt and interest payments
c) Fiscal deficit is the sum of primary deficit and interest payments
d) Primary deficit is the difference between revenue deficit and interest payments

Ans – c)

Which of the following is the correct measure of primary deficit:-

a) Fiscal deficit minus revenue deficit
b) Revenue deficit minus interest payments
c) Fiscal deficit minus interest payments
d) Capital expenditure minus revenue expenditure

Ans -c)

Following are the impacts of the government budget on the economy excluding

a) brings better allocation of resources
b) implement government welfare programs
c) brings aggregate fiscal indiscipline level
d) better access to public goods

Ans – c

Goods and Service Tax (GST) is an example of ________under government receipts

a) Indirect tax
b) direct tax
c) Non-tex revenue
d) income tax

Ans – a)
GST is the Indirect tax as its burden and liabilites lie on different person

An expenditure which is of recurring or non recurring in nature, and which is based on five-year economic plans is called

a) revenue expenditure
b) capital expenditure
c) Plan expenditure
d) non-plan expenditure

Ans – c)
planned expenditure are mentioned in five year plan

Which of the following is capital expenditures

a) Subsidies
b) Interest Payments
c) Purchase of shares
d) Defence purchases

Ans – c)
Capital expendiutres results in either increase of assets or reduce of liabilities

The expenditure incurred for smooth functioning of government departments and for day to day expenses of the government is called……..

a) Capital expenditure
b) Non-plan expenditure
c) revenue expenditure
d) All of the above

Ans – c)
The government day to day expenses are called revenue expenditure.

Which of the following does not form the part of capital receipts of the Union Government?

a) Non-Tax Revenue
b) Loan recoveries
c) Net Market borrowings
d) None of the above

Ans – a)

Cost of tax collection, cost of the audit and printing notes, pension, expenditure on defense, and law and order are treated as_______of the government.

a) Government expenditure
b) Revenue Expenditure
c) Non-Development Expenditure
d) All of the above

Ans – d)

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Which of the following budget is more suitable for developing economies like India?

a) Deficit budget
b) Balanced Budget
c) Surplus Budget
d) None of these

Ans – a)
developing countries incur more expenses on infrastructure and on administration for future growth. Thus total expenditure of the government are always more than the receipts.

Zero primary deficit means that the government has to resort to borrowings only to make

a) Interest Payment
b) fiscal payment
c) Capital payment
d) Primary payment

Ans – a)
Primary deficit = Borrowing – Interest Payments. When borrowing are just equal to pay the interest on accumulated loans, the primary deficit is zero.

From the following, which is not an implication of fiscal deficit?

a) It determine total borrowing requirements to the government
b) It increases the liability of the government
c) It increase foreign dependence
d) Repayment of the loan together with interest further decreases the fiscal
deficit

Ans – d)
repayment of the loan is the solution of the fiscal deficit not the implication.

The government starts selling its securities to the private sector. What is the process called?

a) Open market operation
b) Disinvestment
c) Monetary expansion
d) All of the above

Ans – b)
When government sells its government own company’s share to private owners. This process is called disinvestment.

If the fiscal deficit is ₹ 550 crore and interest payment is ₹ 200 crore, then primary deficit.

a) ₹ 200 crore
b) ₹ 550 crore
c) ₹ 765 crore
d) ₹ 350 crore

Ans – d)
Primary Deficit = Fiscal Deficit – Interest Payments

If government borrowings = ₹ 800 crore and interest payments = ₹ 155 crores, then find fiscal deficit and primary deficit.

a) Fiscal deficit = ₹ 155 crore and Primary deficit = ₹ 800 crore
b) Fiscal Deficit = ₹ 800 crore and Primary deficit = ₹ 155 crore
c) Fiscal deficit = ₹ 155 crore and Primary Deficit = ₹ 645 crore
d) Fiscal Deficit = ₹ 800 crore and Primary Deficit = ₹ 645 crore

Ans – d)
Fiscal deficit = Borrowings, Primary Deficit = Borrwoings – Interest payments

Primary Deficit = Fiscal Deficit – ______________

a) Borrowings
b) Subsidies
c) Interset Payments
d) Transfer Payments

Ans – c)
Primary Deficit = Fiscal Deficit (Borrowings) – Interest Payments

Which one of the following is not a capital expenditure?

a) Loans advanced by World Bank
b) Construction of School buildings
c) Repayment of loans
d) Purchase of Metro Coaches from Japan

Ans – a)
Capital expenditure either increases assets or reduces the liabilities. But loans advanced by world bank increases the liabilities. Thus it is not the capital expenditure

Primary deficit is borrowing requirement of government for making:

a) Interest Payments
b) Other than interest payments
c) All types of Payments
d) Some specific payments

Ans – b)
Primary deficit = Borrowing – Interest Payments

Fiscal deficit equals:-

a) Primary deficit minus interest payments
b) Primary deficit plus interest payments
c) Total budget expenditure minus total budget receipts
d) None of the above.

Ans – b)
Primary deficit = Fiscal Deficit – Interest Payments

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Which of the following is a direct tax?

a) Corporation tax
b) Entertainment tax
c) Excise duty
d) Service tax

Ans – a)
corporation tax are charged by company. As company is an artifical individual. The tax burden and the liabilities both on the same person that is company

Which of the following sources of receipts in government budget increases its liabilities:-

a) Direct taxes
b) Recovery of loans
c) Borrowings
d) Dividend from public sector undertakings

Ans – c
raising loan by the government increases its liabilities.

Which of the following is a source of capital receipt?

a) Foreign donations
b) Dividends
c) Dis-investment
d) Indirect taxes

Ans – c)
Disinvestment decreases the assets of the government hence it is a capital receipt

Fiscal Deficit equals:-

a) Interest payments
b) Borrowings
c) Interest payments less borrowing
d) Borrowings less interest payments

Ans – b)
Fiscal deficit shows the total borrowing requirement of the government during fiscal year.

The primary deficit in a government budget is:-

a) Revenue expenditure – Revenue Receipts
b) Total Expenditure – Total Receipts
c) Revenue deficit – Interest payments
d) Fiscal deficit – Interest Payments

Ans – d)
Primary deficit is the difference between the fiscal deficit and the interest payments on accumulated borrowings

Primary deficit equals:-

a) Borrowings
b) Interest payments
c) Borrowings less interest payments
d) Borrowings and interest payments both

Ans:- c)

Ans – c)

Which one of the following is a combination of direct taxes:-

a) Excise duty and wealth tax
b) Service tax and Income tax
c) Excise duty and Service tax
d) Wealth tax and Income tax

Ans – d)
Wealth and income tax burden and the liability both lie on same person.

Direct tax is called direct because it is collected directly from:-

a) The producers on goods produced
b) The seller on goods sold
c) The buyers of goods
d) The income earners

And – d)
Direct are the tax, The burden and the liability of which lie on the same person.

The Non-tax revenue in the following is:-

a) Export duty
b) Import duty
c) Dividends
d) Excise

Ans – c)
dividends is received by the government if it investment in shares

Which of the following is not a revenue receipt?

a) Recovery of Loans
b) Foreign Grants
c) Profits from Public Enterprises
d) Wealth Tax

Ans – a)
Recovery of loans reduces the assets of the government. Thus it is a capital Receipt.

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Borrowing in government budget is:-

a) Revenue deficit
b) Fiscal deficit
c) Primary Deficit
d) Deficit in taxes

Ans – b)

Identify which of the following statements is true:-

a) The difference between planned revenue expenditure and planned
revenue receipts are called fiscal deficit
b) The difference between total planned expenditure and total planned receipts
is called a fiscal deficit.
c) The difference between total planned receipts and interest payment is
called a primary deficit.
d) The sum of primary deficit and interest payment is called a fiscal deficit.

Ans – d)
Primary Deficit = Fiscal Deficit – Interest Payments

Which of the following statements is true?

a) Government Borrowings from the World Bank is a Revenue Receipts.
b)Higher Fiscal deficit is the result of a higher revenue deficit.
c) The loans taken by the government represent a situation of fiscal deficit.
d) The excess of capital receipts over the revenue receipts is called
Revenue deficit.

Ans – c)
Fiscal Deficit = Borrowing

Which of the following statements is true?

a) Expenditure on Ujjwala Yojana launched by the government is an example of
capital expenditure
b) Expenditure on Ujjwala Yojana launched by the government is an example
of Revenue Expenditure
c) Expenditure on Ujjwala Yojana launched by the Government is an example of
Deferred Revenue Expenditure
d) None of the Statements are correct

Ans – b)
Expenditure on Ujjwala Yojana does not result in creation of an assets nor decrease the liabilities. Thus it is an revenue expenditure

Which of the following is a capital receipt in the government Budget?

a) Income tax
b) Interest receipt
c) Sale of shares of a public sector undertaking (PSU) to X Limited (Private
company)
d) Dividends from a Public Sector Undertaking (PSU)

Ans – c)
Explanation:- Sales of shares of a public sector undertaking is termed as disinvestment.

________ is an example of a non-tax revenue receipt.

a) Fees and Fines
b) Interest receipts
c) Dividends and profits on investments
d) All of these

And – d)
Explanation:- Fees and Fines, Interest receipts and Dividends and profits on ivnestments does not create any liability or assets. Thus these are the revenue receipts.

Government expenditure on Mid-Day Meal Scheme running in government (state-run) schools is a type of

a) Revenue
b) Capital
c) Plan
d) Non-plan

Ans – a)
Explanation:- Expenditure on Mid day mean neither creates any liability or assets thus are termed as revenue expenditurek.

Which one of the following is not Capital Expenditure?

a) Loans advanced by Government
b) Construction of school buildings
c) Repayment of loans
d) Tax Receipts

Ans – d)
Explanation:- Tax receipts neither increases assets nor reduces liability thus is not a capital expenditure. Capital Expenditure are those expenditure which either increases assets and reduced liability.

________ deficit includes interest payment by the Government on the past loans.

a) Fiscal deficit
b) Revenue deficit
c) Primary deficit
d) Budgetary deficit

Ans – a), b)
Explanation:- Fiscal deficit = Current Year loan requirement + Past loan interest due, Interest payment on the loan is also a revenue expenditure thus also included in revenue deficit too.

Government expenditure incurred on defense services is a type of _______ expenditure in the Government Budget.

a) Revenue
b) Capital
c) Plan
d) Non-plan

Ans – a)

Zero Primary Deficit means:

a) Fiscal Deficit is also Zero
b) No Interest payments
c) Government has to resort to borrowings only to meet interest payments
d) No borrowings Requirements

Ans – c)
Explanation:- Primary Deficit = Borrowing – Interest Payments. When borrowing requirements of the current year is just to pay the interest on the loans. The Primary deficit is zero.

A Government budget is prepared for a fiscal year running from:

a) 1st January to 31st December
b) 1st April to 31st December
c) 1st April to 31st March
d) 1st January to 30th April

Ans – c)

If the Government establishes a new hospital or a university, this expenditure incurred in the Government Budget will be a type of ______ expenditure.

a) Revenue
b) Capital
c) Plan
d) Non-plan

Ans – b)
Explanation:- Expenditure on hospital and university creates assets thus it is a capital expenditure.

The primary deficit can be zero if ____.

a) Fiscal deficit = Interest payments
b) Fiscal deficit < Interest payments c) Fiscal deficit > Interest payment
d) Revenue deficit < Fiscal deficit

Ans – a)

Which one of the following is an objective of the government budget?

a) Reallocation of resources
b) Economic stability
c) Increasing regional disparities
d) Economic growth

Ans – a), b), d)
Explanation:-

Capital receipts include:

a) Tax Revenue
b) Non-tax Revenue
c) Recovery of loans
d) Borrowings

Ans – c), d)
Explanation:- Capital receipts increases liabilities and reduces assets.

Which of the following is not a non-tax revenue receipt?

a) Goods and Service tax
b) External grants
c) Dividends and Profits
d) Disinvestment

Ans – a)
Explanation:- GST is the tax receipts.

Which of the following is not true for revenue deficit? A revenue deficit:

a) implies that the government is dissaving and is using up the savings of the other sectors of the economy.
b) means that the government will have to borrow not only to finance its investment but also its consumption expenditure requirements.
c) focuses on present fiscal imbalances
d) leads to the build-up of stock of debt and interest liabilities; and forces the government, eventually, to cut productive capital expenditure or welfare expenditure. This would mean lower growth and adverse welfare implications.

Ans – c)

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In the context of the government budget, which of the following statements is correct?

a) Budget is a statement of expected annual receipts and expenditures of the government.
b) Is it a detail of actual receipts and expenditures of the government
in a financial year
c) It offers a detailed description of the achievements of the government during the five-year plans
d) It indicates the BoP status of the domestic economy

Ans – a)

The fiscal deficit will have to be financed through _______.

a) Primary deficit
b) Revenue deficit
c) Borrowings
d) Taxes

Ans – c)
Explanation:-

The formula for calculating Primary deficit is ______.

a) Primary deficit = Borrowings
b) Primary deficit = Fiscal Deficit + Interest Payments
c) Primary deficit = Fiscal Deficit – Interest Payments
d) Primary deficit = Revenue Deficit – Interest Payments

Ans – c)
Explanation:-

Which of the following statement is true?

a) Loans from IMF is a Revenue Receipt
b) Higher revenue deficit necessarily leads to higher fiscal deficit.
c) Borrowing by a government represents a situation of fiscal deficit.
d) Revenue deficit is the excess of capital receipts over the revenue receipts

Ans -c )
Explanation:-

Escheats is an example of:

a) Capital receipts
b) Revenue receipts
c) Capital expenditure
d) Revenue Expenditure

Ans – b)

Disinvestment is a _______ receipt of the government.

a) Revenue
b) Capital
c) Plan
d) Non-Plan

Ans – b)

The fiscal deficit can be estimated using the formula __________.

a) Fiscal deficit = Borrowing
b) Fiscal deficit = Primary Deficit + Interest Payments
c) Fiscal deficit = Total Expenditure – Total Receipts except borrowing
d) All the above

Ans – d)
Explanation:-

Direct tax is called direct because it is collected directly from:

a) The producers on goods produced
b) The sellers on goods sold
c) They buyers of goods
d) The income earners

Ans – d)

Which out of the following is an indirect tax?

a) Corporation tax
b) Value added tax
c) Income tax
d) Wealth tax

Ans – b)
Explanation:- Indirect tax is the tax where burden and liability of the tax lie on different person. In Value added tax (GST) the burden lie on consumer and liability is of seller.

Revenue Deficit can be estimated using the formula _____.

a) Revenue deficit = Borrowings
b) Revenue deficit = Fiscal Deficit + Interest Payments
c) Revenue deficit = Primary Deficit – Interest Payments
d) Revenue deficit = Revenue Expenditure – Revenue Receipts

Ans – d)

Which of the following is an example of Capital Expenditure?

a) Construction of roads by government
b) Repayment of the loan by the government
c) Defence services expenditure
d) Subsidies

Ans – a), b)
Explanation:-

Which of the following is the objective of the government budget?

a) distribution of income and wealth
b) Economic stability
c) GDP growth
d) All of these

Ans – d)

Borrowings are equivalent to:

a) Revenue deficit
b) Primary deficit
c) Fiscal deficit
d) None of these

Ans – c)

When the government receives money by way of loans or from the sale of its assets, such receipts are called ________ in a government budget.

a) Revenue receipts
b) Capital receipts
c) Borrowings
d) Fiscal Deficit

Ans – b)

sale of shares in public sector undertakings (PSUs) is a ______.

a) Capital Receipt
b) Revenue Receipt
c) Non-debt creating a capital receipt
d) None of these

Ans – c), a)

Borrowings is a capital receipt because.

a) It creates a liability
b) It creates an asset
c) It reduces a liability
d) All of the above

Ans – a)

The focus of the government budget is to:

a) maximize fiscal deficit
b) minimise fiscal deficit
c) maximize expenditure
d) maximize revenue

Ans – b)

Fiscal deficit = Total expenditure – (Revenue receipts + ______ ).

a) Capital Receipts
b) Debt creating capital receipts
c) Non-debt creating capital receipts
d) Interest payments

Ans – c)

A large share of ________ in fiscal deficit indicates that a large part of borrowing is being used to meet the government’s consumption expenditure needs rather than investment.

a) Revenue deficit
b) Primary deficit
c) Budgetary deficit
d) Borrowings

Ans – a)

Revenue budget includes:

a) revenue receipts of the government
b) revenue expenditure of the government
c) capital receipts of the government
d) both a) and b)

Ans – d)

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Which of the following is a non-tax receipt?

a) Gift tax
b) Sales tax
c) Donations
d) Excise duty

Ans – c)

The goal of measuring _________ is to focus on present fiscal imbalances.

a) Revenue deficit
b) Fiscal deficit
c) Primary deficit
d) None of the above

Ans – c)
Explanation:- Primary deficit represents current year borrowing requirements.

To obtain an estimate of borrowing on account of current expenditure exceeding revenues, we need to calculate _______.

a) Revenue deficit
b) Fiscal deficit
c) Primary deficit
d) None of the above

Ans – c)
Explanation:- Primary deficit = only current year borrowing requirement = Fiscal deficit – Interest payments

Union Budget is the budget of :

a) Central Government
b) Local Government
c) State Government
d) Election Commission

Ans – a)

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

a) Revenue deficit is zero
b) Fiscal deficit is zero
c) Total borrowing is equal to interest payments
d) Net interest payments is zero

Ans – c)
Explanation:-

_______ indicates that the government will have to borrow not only to finance its investments but also its consumption expenditure.

a) Revenue deficit
b) Fiscal deficit
c) Primary deficit
d) Budget deficit

Ans – b)

Purchase of shares is related to:

a) Revenue receipt
b) Revenue expenditure
c) capital receipt
d) capital expenditure

Ans – d)

GST stands for:

a) Goods and Sales Tax
b) Goods and Services tax
c) Good and simple tax
d) None of these

Ans – b)

Which of the following includes both revenue and capital expenditures?

a) Investment in shares
b) Subsidies
c) Construction of school building
d) Repayment of the loan with interest

Ans – d)
Explanation:- Reapayment of loan is capital expenditure and Interest on loan is revenue expenditure.

Which of the following statement is not true for the fiscal deficit? A fiscal deficit:

a) represents the borrowing of the government
b) is the difference between total expenditure and total receipts of the government
c) is the difference between total expenditure and total receipts other than borrowing
d) increases the future liability of the government

Ans – b)
Explanation:- Fiscal deficit only consider total receipts other than borrowing.

Interest income is a part of:

a) Non-tax Revenue
b) Revenue Receipts
c) Both a) and b)
d) Neither a) nor b)

Ans – c)

Identify the tax whose burden can be shifted:

a) Income tax
b) Goods and service tax (GST)
c) Corporate tax
d) None of these

Ans – b)

Which of the following statements is true?

a) Fiscal deficit is the difference between total expenditure and total receipts
b) Primary deficit is the difference between total receipt and interest payments
c) Fiscal deficit is the sum of primary deficit and interest payment.
d) None of the above

Ans – c)

Which of the following statements is true?

a) Loans from IMF is a Revenue Receipt
b) Higher revenue deficit necessarily leads to higher fiscal deficit.
c) Borrowing by a government represents a situation of fiscal deficit.
d) Revenue deficit is the excess of capital receipts over the revenue receipts

Ans – c)

“Increasing the Rate of Income Tax” is a part of which objective of government budget?

a) Reallocation of Resources
b) Economic Stability
c) Reducing Regional Disparities
d) Reducing Inequalities in Income and Wealth

Ans – d)

SEZ are created by the government to achieve the objective of:

a) Reallocation of Resources
b) Redistribution of Income
c) Reducing Regional Disparities
d) Economic Stability

Ans – c)

Dividends received from public sector undertakings (PSUs) are a part of the government’s _ .

a) Nontax revenue receipts
b) Tax receipts
c) Capital receipts
d) Capital expenditure

Ans – a)

Which of the following are capital receipts in the Government Budget?

a) Income tax
b) Interest receipts
c) Sale of shares of public sector undertakings (PSUs) to X limited (Private Company)
d) Dividends from a public sector undertaking (PSU)

Ans – c)

In a government budget, revenue deficit is ₹50,000 crores and borrowings are ₹ 75,000 crores. The fiscal deficit will be:

a) ₹25,000 crore
b) ₹75,000 crore
c) ₹1,25,000 crore
d) ₹50,000 crore

Ans – b)

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A progressive tax is a tax which is:

a) Charged at a decreasing rate when the income of the individual increases
b) Charged at an increasing rate when the income of the individual increases
c) a fixed percentage of an individual income
d) None of these

Ans – b)

Which of the following is not a characteristic of public goods?

a) Public goods are non-excludable
b) It is difficult and sometimes impossible to collect fees for public goods
c) The consumption of public goods by several individuals is rivalrous.
d) None of the above

Ans – c)

The intervention of the government whether to raise the level of aggregate demand or reduct it constitutes the _______ of the government budget.

a) Allocation function
b) Redistribution function
c) Stabilisation function
d) None of these

Ans – c)

Which of the following is an indirect tax?

a) Profit tax
b) Wealth tax
c) Custome duty
d) Gift tax

Ans – c)

What is the duration of the Union Budget?

a) Annual
b) Half-yearly
c) Two years
d) Five Years

Ans – a)

Law and order, national defense, sanitation, etc, are ___.

a) final goods
b) intermediate goods
c) public goods
d) private goods

Ans – c)

The government has increased the rate of income tax. The objective of the government is to:

a) maintain balanced regional development
b) redistribute income & wealth
c) reallocate resources
d) ensure economic stability

Ans – b)

The primary deficit can be zero it _

a) Fiacal Deficit = Interest payments
b) Fiscal Deficit < Interst Payments c) Fiscal Deficit > Interest Payments
d) Revenue Deficit < Fiscal Deficit

Ans – a)

Union Budget is presented in the Parliament by:

a) President
b) Home minister
c) Finance Minister
d) Prime Minister

Ans – c)

The government affects the i) __________ of households by making transfers and collecting taxes. It is through this that the government can change the distribution of income and bring about a distribution that is considered ‘fair’ by society. This is the ii) __ function of the government Budget.

a) Private income, ii) allocation
b) i) Personal income, ii) Stabilisation
c) i) Personal disposable income, ii) redistribution
d) i) Public income, ii) redistribution

Ans – c)

Which of the following is a revenue expenditure in a government budget?

a) Expenses incurred for the normal functioning of the government departments and various services.
b) Interest payments on debt incurred by the government
c) Grant’s given to a state government for the creation of assets
d) All of the above

Ans – d)

Which of the following is not a non-tax revenue receipt?

a) Goods and Service tax
b) External Grants
c) Dividends and Profits
d) Disinvestment

Ans – a)

Revenue earned by the government from the property without any legal heir is called:

a) donation
b) escheat
c) special assessment
d) Both b) and c)

Ans – b)

Which of the following is an example of the capital expenditure of the government?

a) Expenditure on the acquisition of land, building, machinery, and equipment.
b) Investment in shares
c) Loans and advances by the central government to state and union territory government. PSUs and other parties
d) All of the above

Ans – d)

Loans to State Government and Union Territory Governments are a part of _ .

a) Revenue receipts
b) Capital receipts
c) Capital expenditure
d) Plan revenue expenditure

Ans – c)

Which one is a capital receipt?

a) Funds Raised through National Savings Certificates
b) Financial help from Microsoft for the victims of flood-affected areas.
c) Sale of 40% shares of public sector undertaking to a private enterprise
d) Profit of LIC, a public enterprise

Ans – a), c)

Which one of the following is a part of capital expenditure?

a) Salary paid to army officers
b) Expenditure on the construction of Metro
c) Pension paid to retired government employees
d) Amount borrowed from Japan repaid

Ans – b), d)

Which of the following is a capital receipt in the context of the government budget?

a) Interest receipts
b) External Grants
c) Provident funds
d) Personal Income tax

Ans – c)

The non-tax revenue in the following is:

a) Export duty
b) Import duty
c) Dividends
d) Excise

Ans – c)

Which of the following affects national income?

a) Goods and Services tax
b) Corporation tax
c) Subsidies
d) None of these

Ans – a)

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Pension Payment is an example of:

a) Plan expenditure
b) Revenue expenditure
c) Capital expenditure
d) Non-plan expenditure

Ans – b)

Which one of the following is a combination of direct taxes?

a) Excise duty and wealth tax
b) Service tax and Income tax
c) Excise duty and Service tax
d) Corporation tax and Personal income tax

Ans – d)

Which of the following is not a revenue receipt?

a) Recovery of loans
b) Foreign grants
c) Profits and public enterprises
d) Wealth tax

Ans – a)

“Policies of surplus budget during inflation’ is a part of which objective of government budget?

a) Economic growth
b) Economic Stability
c) Reducing Regional Disparities
d) Reallocation of Resources

Ans – b)

Which of hte following conditions satisfy to concept of revenue receipts?

a) Does not create a liability
b) Does not reduce an asset
c) Neither a) nor b)
d) Both a) and b)

Ans – d)

Direct tax is called direct because it is collected directly from:

a) The producers on goods produced
b) The sellers on goods sold
c) The buyers of goods
d) The income earners

Ans – d)

Which one of these is a revenue expenditure?

a) Purchase of shares
b) Loans advanced
c) Subsidies
d) Expenditure on acquisition of land

Ans – c)

A tax, the burden of which can be shifted on to others, is called:

a) indirect tax
b) direct tax
c) wealth tax
d) None of these

Ans – a)

Subsidies are an example of:

a) Revenue Expenditure
b) Capital Expenditure
c) Plan Expenditure
d) None of them

Ans – a)

Loans to state government are a part of:

a) revenue receipts
b) capital receipts
c) capital expenditure
d) plan revenue expenditure

Ans – c)

Which one of these is revenue expenditure?

a) purchase of shares
b) loan advanced
c) subsidies
d) expenditure on acquisition of land

Ans – c)

Which out of the following is a non-development expenditure:-

a) Scientific research
b) Social welfare
c) Administration
d) None of these

Ans – c)

Identify the non-tax revenue from the following statement: “It refers to claim of the government on the property of a person who dies without leaving behind any legal heir or a will”.

a) Special Assessment
b) Escheats
c) Forfeitures
d) Fees

Ans – b)

Which of the following is a direct tax?

a) Income tax
b) GST
c) excise duty
d) custom Duty

Ans – a)

Which of the following is a source of capital receipt?

a) foreign donations
b) dividends
c) disinvestment
d) indirect taxes

Ans – c)

Which one of the following statements is incorrect?

a) Revenue receipts are regular in nature
b) There is no future obligation to return the amount in case of revenue receipts
c) Capital receipts either create an asset or cause a reduction in the liabilities of the government.
d) Borrowings are treated as a capital receipt as they lead to a decrease in liability.

Ans – c), d)

Tax, the impact of which lies on the person on whom it is legally imposed, is known as:

a) indirect tax
b) direct tax
c) value-added tax
d) None of these

Ans – b)

The fiscal deficit will have to be financed through ______.

a) Primary deficit
b) Revenue deficit
c) Borrowing
d) Taxes

Ans – c)

The fiscal deficit will have to be financed through _____.

a) Primary deficit
b) Revenue deficit
c) Borrowing
d) Taxes

Ans – c)

Repayment of Loans is an example of:

a) Capital Expenditure
b) Non-plan expenditure
c) Revenue Expenditure
d) Plan Expenditure

Ans – a)

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Fees of the government college is a revenue receipt because:

a) It creates a liability for the government.
b) It neither creates any liability nor reduces any asset of the government
c) It neither creates any asset nor reduces any liability of the government.
d) It increases the assets of the government.

Ans – b)

If the budgetary deficit of the government is ₹25,000 crores and the borrowings and other liabilities are ₹7,000 crores, how much will be the fiscal deficit?

a) ₹25,000 crore
b) ₹32,000 crore
c) ₹18,000 crore
d) ₹7,000 crore

Ans – b)

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

a) Revenue deficit is zero
b) Fiscal deficit is zero
c) Total borrowing is equal to interest payments
d) Net interest payments is zero

Ans – c)

Fiscal Deficit – Interest Payments = ______ .

a) Revenue Deficit
b) Budget Deficit
c) Primary Deficit
d) None of these

Ans – c)

Interest payments are subtracted from which deficit to arrive at Primary Deficit:

a) Revenue Deficit
b) Capital Deficit
c) Fiscal Deficit
d) None of these

Ans – c)

Which one of the following is an indirect tax?

a) Wealth tax
b) Excise duty
c) Income tax
d) None of these

Ans – b)

The fiscal deficit is financed through ________ .

a) Market Borrowings
b) Borrowings from the Central Bank
c) borrowings from foreign governments
d) All of these

Ans – d)

Borrowing in the government budget is:

a) Revenue deficit
b) Fiscal deficit
c) Primary deficit
d) Deficit in taxes

Ans – b)

Identify the indirect tax from the following options:

a) Corporate tax
b) Income tax
c) Goods and services tax (GST)
d) Capital Gains Tax

Ans – c)

Which of the following are the components of a budget?

a) Capital budget
b) Revenue budget
c) Both a) and b)
d) Neither a) nor b)

Ans – c)

Borrowing in government budget is:

a) Revenue Deficit
b) Fiscal Deficit
c) Primary Deficit
d) Deficit in taxes

Ans – b)

Goods and services provided by the market mechanism, i.e. by the exchange between individual consumers and producers are called ________.

a) Private goods
b) Public goods
c) Marketable goods
d) Economic goods

Ans – a)

The government provides certain goods and services which can not be provided by the market mechanism such as national defense, roads, government administration, etc, which are referred to as ______.

a) Private goods
b) Public goods
c) Marketable goods
d) Economic goods

Ans – b)

Which of the following statement is true?

a) Loans from IMF is a Revenue Receipt
b) Higher revenue deficit necessarily leads to higher fiscal deficit.
c) Borrowing by a government represents a situation of fiscal deficit.
d) Revenue deficit is the excess of capital receipts over the revenue receipts

Ans – c)

Construction of a school building is a:

a) Capital Receipt
b) Revenue Expenditure
c) Capital Expenditure
d) Revenue Expenditure

Ans – c)

_________ are those receipts that do not lead to a claim on the government. They are non-redeemable.

a) Revenue receipts
b) Capital receipts
c) Planned receipts
d) Non plan receipts

Ans – a)

When the government receives money by way of loans or form the sale of its assets, such receipts are called
_ in a government budget.

a) Revenue receipts
b) Capital receipts
c) Planned receipts
d) Non plan receipts

Ans – b)

If estimated government receipts are more than estimated government expenditure, it is said to be a:

a) Surplus budget
b) Deficit Budget
c) Balanced Budget
d) None of these

Ans – a)

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Budget Deficit means:

a) Total expenditure – Total Receipts
b) Capital Expenditure – Capital Receipts
c) Total Expenditure – Total Receipts (excluding borrowings)
d) Total Expenditure – Revenue Receipts

Ans – a)

__ is expenditure incurred for purposes other than the creation of physical or financial assets or the
central government.

a) Revenue expenditure
b) Capital expenditure
c) Plan expenditure
d) Non-plan expenditure

Ans – a)

Interest payments, defense services expenditure, subsidies, salaries, and pensions are the main items of __
of the government. (plan expenditure/non-plan expenditure)

a) Revenue expenditure
b) Capital expenditure
c) Plan expenditure
d) Non-Plan expenditure

Ans – a), d)

If borrowings and other liabilities are added to the budgetary deficit, we get:

a) Fiscal Deficit
b) Primary Deficit
c) Capital Deficit
d) Revenue Deficit

Ans – a)

Which of the following is a direct tax?

a) Income tax
b) Excise duty
c) Sales tax
d) Custome duty

Ans – a)

If the government need to incur higher expenditure, it will have to __ taxes in order to keep the budget
balanced.

a) increase
b) decrease
c) double
d) None of these

Ans – a)

Which of the following is not a characteristic of public goods?

a) Public goods are non-excludable
b) It is difficult and sometimes impossible to collect fees for the public goods.
c) The consumption of public goods by several individuals is rivalrous.
d) None of the above

Ans – c)

While financing a deficit, under which measure government can print more currency.

a) Deficit financing
b) Disinvestment
c) By issuing bonds
d) None of them

Ans – a)

The incidence of tax refers to:

a) Level and rate of taxation
b) Who ultimately bears the money burden of the tax
c) Growth of taxation
d) Way in which a tax is collected

Ans – b)

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The government budget has a revenue deficit. This gets financed by:

A) Borrowing
B) Disinvestment
C) Tax Revenue
D) Indirect taxes

Options:

a) A and D
b) C and D
c) A and B
d) C and B

Ans – c)

The intervention of the government whether to raise the level of aggregate demand or reduce it constitutes the
______ of the government budget.

a) Allocation function
b) Redistribution function
c) Stabilisation function
d) None of these

Ans – c)

Identify the tax whose burden can’t be shifted.

a) GST
b) Income tax
c) Sales tax
d) VAT

Ans – b)

Gift tax is a paper tax because _________ .

a) It is an indirect tax
b) It is a direct tax
c) It does not have a significant revenue yield
d) it does not have a significant capital yield

Ans – c)

Identify which of the following statements is true?

a) Fiscal deficit is the difference between planned revenue expenditure and planned revenue receipts.
b) Fiscal deficit is the difference between total planned expenditure and total planned receipts.
c) Primary deficit is the difference between total planned receipt and interest payments
d) Fiscal deficit is the sum of primary deficit and interest payment.

Ans – d)

The tax that is imposed on value-added at the various stages of production is known as:

a) Corporate profit tax
b) Direct personal tax
c) value-added tax
d) None of these

Ans – c)

Which one of the following statements is incorrect?

a) Revenue receipts are regular in nature
b) There is no future obligation to return the amount in case of revenue receipts
c) Capital receipts either create an asset or cause a reduction in the liabilities of the government.
d) Borrowings are treated as capital receipts as they lead to an increase in liability.

Ans – c)

Fees of the government college is a revenue receipt because:

a) it creates a liability of the government
b) it neither creates any liability nor reduces any asset of the government
c) it neither creates any asset nor reduces any liability of the government
d) it increases assets of the government

Ans – b)

Which one of the following is a combination of capital expenditure?

a) Grants and interest payments
b) Subsidies and construction of roads
c) Construction of roads and repayment of loans
d) Defence services expenditure and construction of school building

Ans – c)

Which of the following statement is not true for the fiscal deficit? A fiscal deficit:

a) represents the borrowing of the government
b) is the difference between total expenditure and total receipts
of the government
c) is the difference between total expenditure and total receipts other
than borrowing
d) increases the future liability of the government

Ans – b)

The _ includes only such transactions that affect the current income and expenditure of the government.

a) Budget deficit
b) Revenue deficit
c) Fiscal deficit
d) Primary deficit

Ans – b)

Which of the following is not true for the fiscal deficit?

a) Fiscal deficit = Total expenditure – Revenue receipts – Non debt creating capital receipts
b) Fiscal deficit = Net borrowing at home + Borrowing from RBI + Borrowing from abroad
c) Fiscal deficit = Primary deficit + Interest payments on accumulated debt
d) None of the above

Ans – d)

__ is a key variable in judging the financial health of the public sector and the stability of the
economy.

a) Revenue deficit
b) Fiscal deficit
c) Primary deficit
d) None of the above

Ans – b)

Borrowing in the government budget is:

a) Revenue deficit
b) Fiscal deficit
c) Primary deficit
d) Deficit in taxes

Ans – b)

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The non-tax revenue in the following is:

a) Income tax
b) Corporate Tax
c) Dividends
d) License Fee

Ans – c)

Which of the following is a revenue receipt?

a) Sale of shares of a public sector undertaking (PSU) to a private company, Y ltd
b) Financial help from a multinational corporation for victims in a flood-affected area.
c) Dividends paid to the government by the state bank of India
d) Both b) and c)

Ans – d)

Which of the following statements is true?

a) Fiscal deficit is the difference between total expenditure and total receipts
b) Primary deficit is the difference between total receipt and interest payments
c) Fiscal deficit is the sum of primary deficit and interest payment
d) None of the above

Ans – c)

The primary deficit in a government budget equals:

a) Interest payments
b) Interest payments less borrowings
c) Borrowings less interest payments
d) None of these

Ans – c)

The primary deficit in a government budget is:

a) Revenue expenditure – Revenue receitps
b) Total expenditure – Total receipts
c) Revenue deficit – Interest payments
d) Fiscal deficit – Interest payments

Ans – d)

The primary deficit in a government budget is:

a) Revenue expenditure – Revenue receipts
b) Total expenditure – Total receipts
c) Revenue Deficit – Interest payments
d) Fiscal deficit – Interest payments

Ans – d)

Primary deficit is borrowing requirement of government for making.

a) interest payment
b) other than the interest payment
c) payments of public debts
d) payment of borrowing from RBI

Ans – b)

Zero primary deficit means:

a) no liabilities with the government
b) the government has to resort to borrowing only to meet interest payments
c) no interest payments
d) no current liabilities

Ans – b)

In a situation of Inflation, the government should adopt:

a) Balanced Budget
b) Deficit Budget
c) Surplus Budget
d) None of these

Ans – c)

Direct tax is called direct because it is collected directly from:

a) The producers on goods produced
b) The sellers on goods sold
c) The buyers of goods
d) The income earners

Ans – d)

The primary deficit in a government budget equals:

a) Interest payments
b) Interest payments less borrowings
c) Borrowings less interest payments
d) None of the above

Ans – c)

The government decides to give budgetary incentives to investors for making investments in backward regions.
Which objective of the government budget is being pursued by the government?

a) Allocation of resources
b) Reduction in income inequalities
c) Price stability
d) Economic growth

Ans – a)

The Government, under Ujjwala Yojana, is providing free LPG kitchen gas connections to the families below the
poverty line. What objective the government is trying to fulfill through the government budget?

a) Allocation of resources
b) Reduction in income inequalities
c) Price stability
d) Economic growth

Ans – b)

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Fiscal deficit equals:

a) Primary deficit minus interest payments
b) Primary deficit plus interest payments
c) Total budget expenditure minus total budget receipts
d) None of the above

Ans – b)

Which of the following is an example of a non-debt capital receipt?

a) Financial help from a multinational corporation for victims in a flood-affected area.
b) Sale of share of a Public sector Undertaking (PSU) to a private company, Y ltd
c) Dividends paid to the Government by the State Bank of India
d) Borrowings from International Monetary Fund (IMF)

Ans – b)

Which of the following is an indirect tax?

a) Personal income tax
b) Goods and service tax
c) Corporation tax
d) Gift tax

Ans – d)

Which of the following is an example of capital expenditure in a government budget?

a) Grants to state governments
b) Payment of salaries to staff of government hospitals
c) Purchase of cranes for the construction of flyovers
d) Defence services expenditure

Ans – c)

Which one of these is a revenue expenditure?

a) Purchase of shares
b) Loans advanced
c) Subsidies
d) Expenditure on acquisition of land

Ans – c)

Which of the following is a source of capital receipt?

a) Foreign Donations
b) Dividends
c) Disinvestment
d) Indirect taxes

Ans – c)

Gift tax is a paper tax because:

a) it is an indirect tax
b) it is a direct tax
c) it does not have a significant revenue yield
d) both b) and c)

Ans – c)

Which of the following statements is true?

a) Fiscal deficit is the difference between total expenditure and
total receipts
b) Primary deficit is the difference between total receipt and interest payments
c) Fiscal deficit is the sum of primary deficit and interest payment.

Ans – c)

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Which of the following is not a revenue receipt?

a) Recovery of loans
b) Foreign grants
c) Profits of public enterprises
d) Corporate tax

Ans – a)

The non-tax revenue in the following is:

a) Export duty
b) Import duty
c) Dividends
d) Excise

Ans – c)

Which one of these is a revenue expenditure?

a) Purchase of shares
b) Loans advanced
c) Subsidies
d) Expenditure and acquisition of land

Ans – c)

Identify the missing item in the following expression: ______ = Fiscal Deficit – Interest payments

a) Revenue Deficit
b) Primary Deficit
c) Both a) and b)
d) Neither a) nor b)

Ans – b)

Fiscal deficit equals:

a) Interest Payments
b) Borrowings
c) Interest payments less borrowing
d) Borrowings less interest payments

Ans – b)

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Which of the following is not a non-tax receipt?

a) Fees
b) Fines
c) Gift tax
d) Grants and donations

Ans – c)

Primary deficit equals:

a) Borrowings
b) Interest payments
c) Borrowings less interest payments
d) Borrowings and interest payments both

Ans – c)

Disinvestment by government means:

a) Selling of its fixed capital assets
b) Selling of shares of public enterprises held by it
c) Selling of its buildings
d) All the above

Ans – b)

Which of the following sources of receipts in the government budget increases its liabilities?

a) Direct taxes
b) Recovery of loans
c) Borrowings
d) Dividend from public sector undertakings

Ans – c)

A large fiscal deficit implies:

a) Very small amount of borrowings
b) Small amount of borrowings
c) a Large amount of borrowings
d) No borrowings

Ans – c)

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Primary deficit is borrowing requirement of government for making________

a) Interest payments
b) other than interest payments
c) All types of payments
d) Some specific payments

Ans – b)

Fiscal deficit equals:

a) Primary deficit minus interest payments
b) Primary deficit plus interest payments
c) Total budget expenditure minus total budget receipts
d) None of the above

Ans – b)

Primary deficit is equal to :

a) Fiscal Deficit less interest payments
b) Revenue deficit less borrowings
c) Borrowings less interest payments
d) Borrowings less fiscal deficit

Ans – a)

Primary deficit is borrowing requirements of the government for making _______.

a) Interest payments
b) other than interest payments
c) All types of payments
d) Some specific payments

Ans – b)

Which of the following is a part of the revenue expenditure in the Indian Government budget?

a) Interest payments
b) Defence purchases
c) wage bill of the government
d) All of these

Ans – d)

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Which of the following are the objectives of the government budget?

a) Redistribution of income and wealth
b) Economic stability
c) Both a) and b)
d) None of these

Ans – c)

Which is a revenue receipt of the government.

a) Funds raised by the government by issuing National Saving Certificates
b) Sale of 40% shares of a public sector undertaking to private enterprises.
c) Profits of LIC, a public enterprise
d) Amount borrowed from Japan for construction of Bullet Train

Ans – c)

Identify which of the following statements is true?

a) Fiscal deficit is the difference between planned revenue expenditure and planned revenue receipts
b) Fiscal deficit is the difference between total planned expenditure and total planned receipts
c) Primary deficit is the difference between total planned receipt and interest payments
d) Fiscal deficit is the sum of primary deficit and interest payment

Ans – d)

Which one of the following is an indirect tax?

a) Wealth tax
b) Excise duty
c) Income tx
d) None of these

Ans – b)

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

a) Revenue deficit is zero
b) Net interest payments are zero
c) Fiscal deficit is zero
d) Fiscal deficit is equal to interest payment

Ans – d)

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Dividends received from public sector undertakings (PSUs) are a part of the government’s ______ .

a) Non-tax Revenue Receipts
b) Tax Receipts
c) Capital Receipts
d) Capital Expenditure

Ans – a)

The capital receipt is that receipt of the government which:

a) Creates a liability
b) reduces the assets
c) both a0 and b)
d) neither a) nor b)

Ans – c)

Which of the following is a non-tax receipt?

a) Gift tax
b) Sales tax
c) Gifts and grants
d) Excise duty

Ans – c)

Which of the following are capital receipts of the government?

a) Recovery of loans
b) Borrowings
c) Disinvestment
d) All of these

Ans – a)

Which of the following are capital receipts of the government?

a) Recovery of loans
b) Borrowings
c) Disinvestment
d) All of these

Ans – d)

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Capital expenditure is the estimated expenditure of the government by which:

a) Assets are increased
b) liability is decreased
c) both a) and b)
d) assets and liabilities do not change

Ans – c)

An annual statement of the estimated receipts and expenditure of the government over the fiscal year is known as

a) Government budget
b) Government Income estimates
c) Government Account
d) Government Expenditure

Ans – a)

Identify the incorrect statement.

a) Budget is passed in the parliament.
b) Budget is usually for a period of 2 years.
c) Budget is the financial statement of the government’s expenditure and receipts
d) Finance Minister presents the annual government budget.

Ans – b)

A deficit budget refers to that situation in which the government’s budget expenditure is:

a) less than its budget receipts
b) more than its budget receipts
c) equal to its budget receipts
d) None of these

Ans – b)

Fiscal Deficit =

a) Total expenditure – Total receipts other than borrowing
b) Revenue expenditure – Revenue receipts
c) Capital Expenditure – Capital receipts
d) Revenue expenditure + Capital Expenditure – Revenue receipts

Ans – a)

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which of the following is the component of a budget?

a) Revenue budget
b) Capital budget
c) Both of these
d) None of these

Ans – c)

The government plans to impose high taxes on tobacco products. The main objectivs of government here is:

a) Redistribution of income
b) Economic stability
c) Reallocation of resources
d) Direct participation

Ans – a)

The government had levied a one-time pollution tax on diesel vehicles with an objective of:

a) Reduction of inequality
b) Reallocation of resources
c) Economic stability
d) Economic growth

Ans – b)

In which of the following ways, can deficit in the budget be financed?

a) Borrowing from RBI
b) Borrowing from the public
c) Both a) and b)
d) Neither a) nor b)

Ans – c)

Which of the following is/are implications of fiscal deficit?

a) Crowding out
b) Inflationary spiral
c) Erosion of government credibility
d) All of these

Ans – d)

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Which of the following statements is correct?

a) Tax receipts are capital receipts
b) Deposits by people in provident fund and NSC are capital receipts of government
c) Borrowing from the public is a revenue receipt
d) All of the above

Ans – b)

Which of the following is a non-debt creating capital receipt?

a) Recovery of loan
b) Borrowing from public
c) Borrowings from foreign monetary authorities
d) None of these

Ans – a)

A budget is a balanced one when:

a) Total expenditure = Total receipts
b) Total expenditure < Total receipts c) Total expenditure > Total receipts
d) None of these

Ans – a)

Surplus budget is that budget wherein:

a) Estimated revenue of the government < Estimated expenditure of the government
b) Estimated revenue of the government > Estimated expenditure of the government
c) Estimated revenue of the government = Estimated expenditure of the government
d) None of these

Ans – b)

The tax whose incidence can’t be shifted is:

a) Direct tax
b) Indirect tax
c) Regressive tax
d) None of these

Ans – a)

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Direct tax is called direct because it is collected directly from:

a) the producers on goods produced
b) the sellers on goods sold
c) the buyers of goods
d) the income earners

Ans – d)

The difference between fiscal deficit and interest payment is called:

a) Revenue deficit
b) Primary deficit
c) budget deficit
d) capital deficit

Ans – b)

If the primary deficit is ₹ 3,500 and interest payment is ₹ 500, then fiscal deficit is:

a) ₹2,900
b) ₹4,000
c) ₹4,100
d) ₹4,200

Ans – b)

If the government’s expenditure on health infrastructure rises, National income is:

a) Likely to fall
b) Likely to rise
c) Remains constant
d) May rise or fall

Ans – b)

With the introduction of GST, which of the following taxes are not be affected?

a) Sales tax
b) Excise duty
c) Income tax
d) VAT

Ans – c)

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Which one of the following is the tax revenue of the government?

a) Export duty
b) Dividend
c) Interest
d) Fees

Ans – a)

Loans to state governments by the Central government is ________ for the Central government.

a) Revenue Expenditure
b) Capital Expenditure
c) Revenue Receipt
d) Capital Receipt

Ans – b)

Expenditure on maintenance of government office building is:

a) Capital expenditure
b) Revenue expenditure
c) Both revenue and capital expenditure
d) None of these

Ans – a)

Which of the following is the revenue expenditure of the government?

a) Payment of interest
b) Purchase of building
c) Purchase of machinery
d) Loans granted to a state government

Ans – a)

Which one of these is revenue expenditure?

a) Purchase of shares
b) Loans advanced
c) Subsidies
d) Expenditure on acquisition of land

Ans – c)

Which of the following is included in fiscal policy?

a) Public Expenditure
b) Tax
c) Public Debt
d) All of these

Ans – d)

To control inflation in the economy. What should be government do?

a) Increase taxes, Increase Expenditure
b) Increase taxes, decrease expenditure
c) Decrease taxes, decrease expenditure
d) Decrease taxes, increase expenditure

Ans – b)

When government spends more than it collects by way of revenue, it incurs
__________ .

a) Budget surplus
b) Budget deficit
c) Capital Expenditure
d) Revenue Expenditure

Ans – b)

Which of the following statements is untrue?

a) Fiscal deficit is the difference between total budgetary expenditure
and total budgetary receipts net of borrowing.
b) Fiscal deficit is always inflationary
c) Fiscal deficit can arise even if there is no revenue deficit.
d) Fiscal deficit is equal to borrowings

Ans – b)

Which of the following statements is not true for the fiscal deficit?

a) It represents the borrowings of the government.
b) It is the difference between total expenditure and total receipts of the
government.
c) It is the difference between total expenditure and total receipts other
than borrowings
d) It increases the future liability of the government.

Ans – b)

If fiscal deficit is worth ₹30,000 crore and interest payment amounts to ₹8000 crores, primary deficit will be:

a) ₹38,000
b) ₹22,000
c) ₹30,000
d) ₹46,000

Ans – b)

Profit of PSUs is a :

a) Tax receipt
b) Non-tax revenue receipt
c) Capital receipt
d) None of these

Ans – b)

The fiscal deficit is equal to :

a) Interest payments
b) Primary Deficit
c) Budgetary Deficit
d) Borrowings

Ans – d)

Corporate tax is:

a) Direct tax
b) Levied on firm’s profits
c) Collected by the central government
d) All of these

Ans – d)

If interest payments are ₹100 crore and the primary deficit is ₹50 crore. What will be the value of borrowings?

a) ₹50 crore
b) ₹100 crore
c) ₹150 crore
d) ₹200 crore

Ans – c)

Which of the following statements is true?

a) Interest on borrowings is a capital receipt
b) Escheats are revenue receipts
c) Lending by the government is a revenue expenditure.
d) Primary deficit equals borrowings

Ans – b)

Which of the following is a non-capital receipt of government?

a) Fines and penalties
b) Grants
c) Escheats
d) All of the above

Ans – d)

In which of the following ways, a deficit in the budget can be financed?

a) Borrowing from RBI
b) Borrowings from the public
c) Both a) and b)
d) None of these

Ans – c)

The primary deficit in a government budget equals:

a) Interest payments
b) Interest payments less borrowings
c) Borrowings less interest payments
d) None of these

Ans – c)

Which of the following is an indirect tax?

a) Sales tax
b) Excise duty
c) Custom duty
d) All of these

Ans – d)

Which one of the following is the tax revenue of the government?

a) Export duty
b) Dividend
c) Interest
d) Fees

Ans – a)

Which of the following is an indirect tax?

a) Wealth tax
b) Income tax
c) Custom duty
d) Corporation tax

Ans – c)

Which one of the following is the capital expenditure of the government?

a) Payment of pension
b) Payment of subsidies on production
c) Purchasing of shares
d) Grants

Ans – c)

When government spends more than it collects by way of revenue, it incurs:

a) Budget surplus
b) Budget deficit
c) Capital Expenditure
d) Revenue Expenditure

Ans – b)

How many types of revenue receipts are there?

a) 2
b) 3
c) 4
d) 6

Ans – a)

The amount collected by the government in the form of interest, fees, and dividends is known as:

a) Tax revenue receipts
b) Capital receipts
c) Non-tax revenue receipts
d) None of these

Ans – c)

Which of the following is included in fiscal policy?

a) Public expenditure
b) Tax
c) Public debt
d) All of these

Ans – d)

Which one of the following is a pair of direct tax?

a) Excise duty and Wealth tax
b) Service tax and Income tax
c) Excise duty and Service tax
d) Wealth tax and Income tax

Ans – d)

Which of the following is not a revenue receipt?

a) Recovery of loans
b) Foreign grants
c) Profits of public enterprise
d) Wealth tax

Ans – a)

Which of the following is a correct measure of the primary deficit?

a) Fiscal deficit minus revenue deficit
b) Revenue deficit minus interest payments
c) Fiscal deficit minus interest payments
d) Capital expenditure minus revenue expenditure

Ans – c)

______ deficit indicates that the government will have to borrow not only to finance its investments but also its consumption expenditure.

a) Revenue
b) Fiscal
c) Primary
d) None of these

Ans – a)

Providing Covid – 19 vaccines to the neighboring countries will ______ the financial burden of the government.

a) Increase
b) decrease
c) no change
d) marginally decrease

Ans – a)

Providing free LPG connections to the families below the poverty line fulfills ______ objective of the government budget.

a) Economic stability
b) Reallocation of resources
c) Reduction in income inequality
d) None of these

Ans – c)

budget is a statement of actual annual receipts and expenditure of the government.

a) True
b) False
c) partially true
d) Incomplete statement

Ans – b)

The government budget has _________ broad components.

a) two
b) three
c) four
d) many

Ans – a)

The central budget is presented in India on __ every year by the finance minister.

a) 1st January
b) 1st February
c) 1st March
d) 1st April

Ans – b)

Street light is an example of __ good.

a) Private
b) government
c) public
d) None of these

Ans – c)

In India ______ type of taxes are generally of no or little significance due to their very low revenue yield to the government?

a) Paper taxes
b) specific taxes
c) regressive taxes
d) indirect taxes

Ans – a)

Economic stability and equitable distribution of income and wealth can be achieved by the budgetary policy of the government.

a) True
b) False
c) Partially true
d) Incomplete statement

Ans – a)

Production of goods that are socially harmful are discouraged by_____

a) reducing the subsidy
b) imposing taxes
c) Both a) and b)
d) Neither a) nor b)

Ans – b)

______ is not an example of non-tax revenue from below:

a) Fees
b) Penalties
c) Excise duty
d) Both a) and b)

Ans – c)

A surplus budget is when actual receipts exceed estimated expenditures.

a) True
b) False
c) Partially True
d) Incomplete statement

Ans – b)

Developing countries generally prepare a balanced budget.

a) True
b) False
c) Partially true
d) Incomplete statement

Ans – b)

Which of the following is not an objective of the government budget?

a) Reducing inequality of income and wealth
b) Reallocation of resources
c) Economic growth
d) Full employment

Ans – d)

Recently the union government introduced Ujjawala Yojna, which provides free LPG commission to women in a rural areas. Which of the following objective of the government budget is fulfilled in this
case?

a) Reducing inequality of income and wealth
b) Reallocation of resources
c) Economic growth
d) None of the above

Ans – a)

In 2017 government of India brought an important reform in the tax system of the country by introducing GST. Which of the following type of Tax is GST?

a) Direct tax
b) Indirect tax
c) Gift tax
d) Both a) and c)

Ans – b)

SEZ are created by the government to achieve the objective of

a) Balanced regional development
b) Reallocation of resources
c) Economic stability
d) Redistribution of income

Ans – b)

Identify the tax whose burden can be shifted?

a) GST
b) Sales tax
c) VAT
d) All of the above

Ans – d)

Defense expenditures are examples of ________ .

a) revenue expenditure
b) capital expenditure
c) Both a) and b)
d) Neither a) nor b)

Ans – a)

Rahul dies without a legal heir. His property stands transferred to the government. The income under this head will be referred to as ‘Special assessment’.

a) True
b) False
c) Partially true
d) Incomplete statement

Ans – b)

Dis-investment in a capital receipt

a) True
b) False
c) Partially true
d) incomplete statement

Ans – a)

Why gift tax is considered a paper tax?

a) It is an indirect tax
b) It yields very low revenue
c) It is a direct tax
d) Both b) and c)

Ans – b)

There are two types of deficit in a government budget.

a) True
b) False
c) Partially true
d) Incomplete statement

Ans – b)

The formula to calculate primary deficit is _____ .

a) Equal to borrowings
b) Borrowings – Interest Payments
c) Borrowings + Interest Payments
d) Interest Payment – Borrowings

Ans – b)

The government budget is an important monetary policy instrument.

a) True
b) False
c) partially true
d) Can’t be predicted

Ans – b)

Expenditure on relief of earthquake victims is

a) Plan expenditure
b) Non-plan expenditure
c) Both a) and b)
d) None of the above

Ans – b)

Expenditure on maintenance of hospital by the government already constructed sometime ago is a part of

a) Plan expenditure
b) Non-Plan expenditure
c) Can’t be determined
d) None of the above

Ans – a)

Choose the incorrect statement given below

a) Government budget is an annual statement of income and expenditure of the government for the current fiscal year.
b) Budget is prepared by all levels of government.
c) Government, through its budget tries to minimize income inequalities.
d) Fiscal Policy of government includes tax and expenditure policy of the government

Ans – a)

The estimated income receipts of the government in the budget of 2019-20 is ₹25,000 crores and its estimated expenditure is ₹27,500 crore. The budget of the government is

a) balanced
b) deficit
c) surplus
d) None of these

Ans – b)

Dis-investment by the government refers to

a) Selling of fixed capital assets by government
b) Selling of share of PSUs
c) Selling of plants of government
d) Selling of buildings and shares of government

Ans – b)

Loans to state government are a part of

a) Revenue receipts
b) Capital receipts
c) Capital expenditure
d) Plan revenue expenditure

Ans – c)

Identify revenue expenditure from the given below:

a) Purchased shares of PSUs
b) Loan and advancement
c) Subsidies are given to the public
d) Expenditure on acquisition of land

Ans – c)

Which of the following is not a tool of the fiscal instrument of the government?

a) Taxes
b) Subsidies
c) Deficit financing
d) Margin requirement

Ans – d)

During the second outbreak of covid 19 in the country, India received medical equipment from many countries. This is an example of

a) Capital receipt
b) Revenue receipt
c) Both a) and b)
d) Neither a) nor b)

Ans – b)

As an agreement with WHO conventions, India distributed free covid 19 vaccines to many third-world countries. Which of the following type of expenditure is this?

a) Revenue expenditure
b) Capital Expenditure
c) Both a) and b)
d) Neither a) nor b)

Ans – a)

Which of the following is/are a type of capital receipts?

a) Dis-investment
b) Recovery of loan
c) Borrowings
d) All of these

Ans – d)

In a situation of Hyper-inflation, the government should adopt for

a) Balanced budget
b) Deficit budget
c) Capital budget
d) Surplus budget

Ans – d)

__________ deficit includes interest payment by the government on the past loans.

a) Revenue
b) Capital
c) Both a) and b)
d) Neither a) nor b)

Ans – a)

Revenue deficit is always equal to

a) dis-investment
b) borrowings
c) Primary deficit
d) None of these

Ans – d)

Primary deficit in a government budget will be zero, when___________

a) revenue deficit is zero
b) net interest payments are zero
c) fiscal deficit is zero
d) fiscal deficit is equal to interest payment

Ans – d)

Fiscal deficit and borrowings are one or the same thing.

a) True
b) False
c) Partially true
d) Incomplete statement

Ans – a)

The budget deficit is equal to total expenditure minus total receipts.

a) True
b) False
c) Partially True
d) Can’t say

Ans – a)

The primary deficit includes interest payment on previous borrowings.

a) True
b) False
c) Partially true
d) Can’t say

Ans – b)

Which of the following measures of meeting deficit in the budget, leads to an increase in money supply in the economy?

a) Dis-investment
b) Loan from world bank
c) Deficit financing
d) All of the above

Ans – d)

Choose the correct statement given below about demonetization announced on 8th November, 2016.

a) Government removed the legal tender status of the existing currency notes.
b) Central government made existing currency notes a limited legal tender.
c) It reduced the purchasing power of existing currency notes
d) All of the above

Ans – d)

Choose the correct option from given below

a) Non-tax revenues of the government are non-recurring in nature.
b) Borrowings from the rest of the world are revenue receipts
c) During the inflationary gap, the government prepared a deficit budget.
d) Recovery of loans from the rest of the world is revenuer receipt.

Ans – c)

Choose the correct statement from given below

a) Budget deficit is equal to the fiscal deficit if interest payments are zero
b) Zero primary deficit represents a fiscal discipline.
c) Fiscal deficit is equal to the borrowing requirement of the government.
d) Revenue deficit is needed to be inflationary.

Ans – c)

If borrowings and other liabilities are reduced to the budget deficit, we get

a) fiscal deficit
b) primary deficit
c) capital deficit
d) revenue deficit

Ans – a)

If total expenditure is ₹2,000 and total receipts are ₹1,500. Fiscal deficit will be equal to

a) ₹2,000
b) ₹1,500
c) ₹500
d) can’t be determined

Ans – d)

If the primary deficit is ₹3,000 and interest payment is ₹500, the fiscal deficit is

a) ₹3,500
b) ₹4,000
c) ₹4,100
d) ₹4,200

Ans – a)

In a government budget, if revenue receipts are ₹100, capital receipts are ₹50 and revenue deficit is ₹25, how much is the revenue expenditure?

a) ₹100
b) ₹125
c) ₹50
d) ₹75

Ans – b)

In a government budget, non-debt creating capital receipts is ₹200, revenue receipts are ₹1,500, borrowings are ₹150 while capital receipts and revenue receipts are respectively ₹250 and ₹300. What will be the fiscal deficit in this case?

a) ₹150
b) ₹3000
c) ₹500
d) Can’t be determined

Ans – a)

If the government establishes a new university, this expenditure incurred in the government budget will be a type of _____ expenditure.

a) revenue
b) capital
c) non-planned
d) None of these

Ans – b)

______ deficit includes interest payment by the government on the past loans.

a) Revenue deficit
b) Fiscal deficit
c) Primary deficit
d) Both a) and b)

Ans – d)

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Anurag Pathak
Anurag Pathak

Anurag Pathak is an academic teacher. He has been teaching Accountancy and Economics for CBSE students for the last 18 years. In his guidance, thousands of students have secured good marks in their board exams and legacy is still going on. You can subscribe his youtube channel and can download the Android & ios app for free lectures.

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