The Government: Budget and the Economy Test

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The Government: Budget and the Economy Test - 10

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Weekly Quiz Competition

Question 1
1 / -0

One of the Implication of Fiscal deficit is

A
It maintains the supply of money in the economy

B
It decreases the supply of money in the economy

C
It increases the supply of money in the economy

D
It does not affect the supply of money in the economy

Solution

Borrowing from RBI increases money supply in the economy. Increase in money supply leads to increase in general price level and over a period of time it leads to a inflationary spiral.
Question 2
1 / -0

Another Implication of Fiscal deficit is

A
it maintains financial burden for future generation

B
it decreases financial burden for future generation

C
it increases financial burden for future generation

D
it does not affect financial burden for future generation.

Solution

Future generations inherit a laggard economy where GDP growth is low because a significant percentage of national income is used to pay the past debts.
Question 3
1 / -0

Fiscal deficit is unhealthy for economic development as

A
it is a cause of inflation

B
it is a cause of deflation

C
it is a cause of recession

D
it is a cause of prosperity

Solution

Fiscal deficit is an estimate of borrowing by the government. Greater fiscal deficit implies greater borrowings by the government . Borrowing from RBI is often linked to inflationay spiral in the economy.
Question 4
1 / -0

Components of public expenditure is

A
Revenue and capital expenditure

B
budget and capital expenditure

C
investment and capital expenditure

D
Revenue and budget expenditure

Solution

Public expenditure is classified as capital and revenue expenditure. Revenue expenditure does not create assests or cause reduction in liabilities whereas capital expenditure leads to creation of assets or reduction in liabilities.
Question 5
1 / -0

Revenue expenditure is incurred on normal functioning of the govt. Administration. It is

A
FALSE

B
Insufficient information

C
True

D
Can’t say

Solution

Revenue expenditure is incurred in the normal functioning of the government like interest payments, wage bill of the govt, defence purchases, expenditure on subsidies etc.
Question 6
1 / -0

Capital expenditure is incurred on normal functioning of the govt. Administration. It is

A
True

B
False

C
Insufficient information

D
Can’t say

Solution

Revenue expenditure is incurred in the normal functioning of the government. Revenue expenditure is recurring in nature. Its purpose is to keep the government machinery running. It does not create any asset.
Question 7
1 / -0

A Balanced budget is one where

A
Estimated revenues> estimated expenditure

B
Estimated revenues< estimated expenditure

C
Estimated revenues= estimated expenditure

D
All of them

Solution

A balanced budget means a budget in which estimated government receipts and estimated government expenditure are equal., i.e. taxes are equal to government spending.
Question 8
1 / -0

An Unbalanced budget is one where

A
Estimated revenues are not equal to the estimated expenditure

B
All of them

C
Estimated revenues = estimated expenditure

D
Estimated revenues < estimated Receipts of the govt.

Solution

Unbalanced budget is one when estimated revenues are not equal to the estimated expenditures. It may be a deficit or surplus budget. When estimated expenditure is greater than estimated revenues, it is a deficit budget and when estimated revenues are greater than estimated expenditure, then it is a surplus budget.
Question 9
1 / -0

A surplus budget is one where

A
Estimated revenues > estimated expenditure

B
Estimated revenues < estimated Receipts of the govt.

C
All of them

D
Estimated revenues = estimated expenditure

Solution

surplus budget means a budget where the budgeted receipts > budgeted expenditure .
Question 10
1 / -0

A deficit budget is one where

A
Estimated revenues < estimated expenditure

B
Estimated revenues = estimated expenditure

C
Estimated revenues > estimated expenditure

D
Estimated revenues < estimated Receipts of the govt.

Solution

Deficit budget is a budget in which the government revenues raised by the government falls short of the government expenditure .

Deficit budget = estimated government revenue < estimated government expenditure

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Re-Attempt Weekly Quiz Competition

The Government: Budget and the Economy Test - 10

Result

The Government: Budget and the Economy Test - 10

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Rank

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SHARING IS CARING

Question 1

It maintains the supply of money in the economy

It decreases the supply of money in the economy

It increases the supply of money in the economy

It does not affect the supply of money in the economy

Solution

Question 2

it maintains financial burden for future generation

it decreases financial burden for future generation

it increases financial burden for future generation

it does not affect financial burden for future generation.

Solution

Question 3

it is a cause of inflation

it is a cause of deflation

it is a cause of recession

it is a cause of prosperity

Solution

Question 4

Revenue and capital expenditure

budget and capital expenditure

investment and capital expenditure

Revenue and budget expenditure

Solution

Question 5

FALSE

Insufficient information

True

Can’t say

Solution

Question 6

True

False

Insufficient information

Can’t say

Solution

Question 7

Estimated revenues> estimated expenditure

Estimated revenues< estimated expenditure

Estimated revenues= estimated expenditure

All of them

Solution

Question 8

Estimated revenues are not equal to the estimated expenditure

All of them

Estimated revenues = estimated expenditure

Estimated revenues < estimated Receipts of the govt.

Solution

Question 9

Estimated revenues > estimated expenditure

Estimated revenues < estimated Receipts of the govt.

All of them

Estimated revenues = estimated expenditure

Solution

Question 10

Estimated revenues < estimated expenditure

Estimated revenues = estimated expenditure

Estimated revenues > estimated expenditure

Estimated revenues < estimated Receipts of the govt.

Solution

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