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The Government: Budget and the Economy Test - 22

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The Government: Budget and the Economy Test - 22
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Weekly Quiz Competition
  • Question 1
    1 / -0
    Fiscal policy means:
    Solution
    Fiscal Policy is concerned with public revenue and public expenditure and debt. Fiscal policy helps to ensure economic stability and economic growth. During inflation, revenue is decreased. Whereas, during deflation, revenue is increased. How much money should the government collect in taxes, and how should the government spend the money that it raises or borrows, as the case may be? These are the central questions of fiscal policy
  • Question 2
    1 / -0
    Amount realized from the sale of a capital asset or investment is _____________ however amount realized from the sale of inventories in trade is ____________.
    Solution
    Capital Receipts. Receipts of a non-recurring nature and meant for some specific purpose are known as capital receipts. They are shown in the Balance Sheet. Capital receipts are in the form of contribution from owner, loans and proceeds from sale of fixed assets of the business. capital receipts are not available for distribution as profit.
    Receipts which are recurring (received again and again) by nature and which are available for meeting all day to day expenses (revenue expenditure) of a business concern are known as  Revenue receipts, e.g. sale proceeds of goods, interest received, commission received, rent received, dividend received etc. Revenue receipts are available for distribution as profits, meeting revenue expenses, or creating reserve funds.
    Therefore, amount realized from sale of asset or investment is capital receipt and amount realize from the sale of an asset kept for sale is in normal course of business and hence, is revenue receipt.
  • Question 3
    1 / -0
    _____are not available for distribution as profits while______can be utilized for creating reserve fund or for distribution as profits after deducting revenue exp.
    Solution
    Capital Receipts. Receipts of a non-recurring nature and meant for some specific purpose are known as capital receipts. They are shown in the Balance Sheet. Capital receipts are in the form of contribution from owner, loans and proceeds from sale of fixed assets of the business. capital receipts are not available for distribution as profit.
    Receipts which are recurring (received again and again) by nature and which are available for meeting all day to day expenses (revenue expenditure) of a business concern are known as Revenue receipts, e.g. sale proceeds of goods, interest received, commission received, rent received, dividend received etc. Revenue receipts are available for distribution as profits, meeting revenue expenses, or creating reserve funds.
  • Question 4
    1 / -0
    In 1998 As per RBI's New Clasacation, NM1 refers to -
  • Question 5
    1 / -0
    Warehousing method of disinvestment refers to __________.
    Solution
    Warehousing method or Cross holding method of Disinvestment refers to Government selling part of its Shares in one PSU to other PSUs. The term disinvestment is more popularly used where central/ state government sells its holdings of public sector companies. Disinvestment means selling of Public investment to a Private entrepreneur.
  • Question 6
    1 / -0
    Which of these is major component of external debt?
    Solution
    External debt is the portion of a country's debt that was borrowed from foreign lenders, including commercial banks, governments, or international financial institutions. These loans, including interest, must usually be paid in the currency in which the loan was made.
  • Question 7
    1 / -0
    Total Expenditure - [Revenues Receipts + Recovering + Sale of Public Assets]=
    Solution
    Fiscal deficit is defined as excess of total budget expenditure over total budget receipts excluding borrowings during a fiscal year. In simple words, it is amount of borrowing the government has to resort to meet its expenses. A large deficit means a large amount of borrowing. 
  • Question 8
    1 / -0
    Excess of total expenditure over total receipts is known as __________.
    Solution
    Budgetary deficit also known as government deficit refers to a situation when the budget expenditure of the government are greater than the budget revenue of the government due to which the expenses exceed the revenue. 
  • Question 9
    1 / -0
    Determine the budget deficit.

  • Question 10
    1 / -0
    The budget in which its tax revenue and expenditure are equal is called ____________.
    Solution
    Balanced budget refers to a situation where the budget expenditure of the government on tax is equal to the budget revenue of the government from tax paid by the public.
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