The Government: Budget and the Economy Test

Result

The Government: Budget and the Economy Test - 26

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Weekly Quiz Competition

Question 1
1 / -0

Revenue receipts of the government are classified into:

A
Tax revenue and borrowings

B
Tax and non-tax revenue

C
Borrowings and recovery of loans

D
Non-tax revenue and recovery of loans

Solution

Revenue receipts refers to all such types of money receipts that do not create any liability for the government or does not reduce any asset of the government. These basically includes tax and non-tax revenue received by the government from the general public.
Question 2
1 / -0

_____________ budget includes receipts of the government through tax and non-tax sources and that expenditure which doesn't affect the assets and liabilities of the government.

A
Revenue

B
Capital

C
Both A & B

D
Neither A nor B

Solution

Revenue budget are the money receipts or payments that does not lead to decrease or increase in the value of asset and liability of the government. It usually includes the tax and non tax receipts of the government and the public services expenditure of the government.
Question 3
1 / -0

When the estimated government receipts are less than the estimated government expenditure, the budget is termed as ___________ budget.

A
surplus

B
deficit

C
rolling

D
balanced

Solution

Deficit budget is the type of budget where the estimated government expenditure is greater than the estimated government revenue due to which there is a deficit in the budget. Deficit budget is usually regarded as a negative indicator for the economy.
Question 4
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A surplus budget is useful in correcting inflationary gap by lowering the level of _____________.

A
taxation

B
effective demand

C
aggregate supply

D
income inequality

Solution

Surplus Budget is the type of budget where the expected government revenue is greater than expected government expenditure due to which there is a surplus in the budget. Surplus budget is regarded as a positive indicator for the economy as it can be used during inflation through increased revenue receipts by increasing taxes or through reduction in revenue expenditure by reducing public expenditure that can soak liquidity from the economy and decrease the purchasing power that results in fall of effective demand in the economy.
Question 5
1 / -0

Which of the following is a component of the capital budget?

A
Capital receipts

B
Revenue expenditure

C
Capital expenditure

D
Both A & C

Solution

Capital budget are the money receipts or payments that lead to decrease or increase in the value of asset and liability of the government. It is divided into two heads
1. Capital receipts- Capital receipts are all those money receipts of the government that either creates a liability for the government or reduce an asset of the government.
2. Capital expenditure - Capital expenditure are all those expenditure of the government that either creates an asset for the government or reduce the liability of the government. For example - Expenditure on land and building, purchase of shares etc.
Question 6
1 / -0

A deficit budget proves to be useful during the periods of ____________.

A
inflation

B
high employment

C
depression

D
none of the above

Solution

Deficit budget is the type of budget where the estimated government expenditure is greater than the estimated government revenue due to which there is a deficit in the budget. Deficit budget is usually regarded as a negative indicator for the economy but it is regarded to be useful at the time of depression in the economy as it results in reduced taxes or increased public expenditure that resolves the situation of the depressed economy.
Question 7
1 / -0

Government budget comprises of which of the following?

A
Revenue budget

B
Capital budget

C
Administration budget

D
Both A & B

Solution

Budget is a statement of the estimates of the government receipts and government expenditure during the period of the financial year. There are two main component of a budget:

1. Revenue budget - These are the money receipts or payments that does not lead to decrease or increase in the value of asset and liability of the government.
2. Capital budget - These are the money receipts or payments that lead to decrease or increase in the value of asset and liability of the government.
Question 8
1 / -0

What are ways that can be used by the government to correct inflationary gap using surplus budget?

A
Reduction in taxes

B
Increase in tax rates

C
Reduction in public expenditure

D
Both B & C

Solution

Surplus Budget is the type of budget where the expected government revenue is greater than expected government expenditure due to which there is a surplus in the budget. Surplus budget is regarded as a positive indicator for the economy as it can be used during inflation through increased revenue receipts by increasing taxes or through reduction in revenue expenditure by reducing public expenditure that can soak liquidity from the economy and decrease the purchasing power that results in fall of effective demand in the economy.
Question 9
1 / -0

_________ expenditure refers to the expenditure incurred by the government on various programmes in the plan.

A
Plan

B
Non-plan

C
Development

D
Non-development

Solution

Plan expenditure refers to the expenditure that the government spends upon the planned programs. These plans usually have a five years duration and any expenditure above this period is not considered as planned expenditure.
Question 10
1 / -0

Taxes levied on personal income, profits of the corporate, wealth and property is termed as ________ tax.

A
indirect

B
service tax

C
direct

D
none of the above

Solution

Direct tax are the tax where the final burden of the tax is borne by the person on whom it is imposed. These taxes are directly paid by the person on whom it is imposed to the government. For example- income tax, corporate tax etc.

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Re-Attempt Weekly Quiz Competition

The Government: Budget and the Economy Test - 26

Result

The Government: Budget and the Economy Test - 26

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Rank

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SHARING IS CARING

Question 1

Tax revenue and borrowings

Tax and non-tax revenue

Borrowings and recovery of loans

Non-tax revenue and recovery of loans

Solution

Question 2

Revenue

Capital

Both A & B

Neither A nor B

Solution

Question 3

surplus

deficit

rolling

balanced

Solution

Question 4

taxation

effective demand

aggregate supply

income inequality

Solution

Question 5

Capital receipts

Revenue expenditure

Capital expenditure

Both A & C

Solution

Question 6

inflation

high employment

depression

none of the above

Solution

Question 7

Revenue budget

Capital budget

Administration budget

Both A & B

Solution

Question 8

Reduction in taxes

Increase in tax rates

Reduction in public expenditure

Both B & C

Solution

Question 9

Plan

Non-plan

Development

Non-development

Solution

Question 10

indirect

service tax

direct

none of the above

Solution

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