The Government: Budget and the Economy Test

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The Government: Budget and the Economy Test - 32

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Weekly Quiz Competition

Question 1
1 / -0

What can be said about the fiscal deficit?

A
Interest payments

B
Borrowings

C
Borrowings minus interest payments

D
Interest payments minus borrowings

Solution

The fiscal deficit indicates the state’s borrowing needs.
Question 2
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Which of these measures primary deficit accurately?

A
Revenue deficit – interest payments

B
Capital expenditure – revenue expenditure

C
Fiscal deficit – revenue deficit

D
Fiscal deficit – interest payments

Solution

The measure "Fiscal deficit - interest payments" accurately reflects the primary deficit. It represents the fiscal deficit minus interest payments, isolating the deficit excluding debt-servicing costs, thus providing a clearer picture of the government's borrowing requirements for non-interest expenditure. Therefore, option D correctly identifies the measure that captures the primary deficit.
Question 3
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Choose the capital expenditures from the following –

A
Subsidies

B
Share purchases

C
Defence purchases

D
Interest payments

Solution

Capital expenditure refers to the estimated expenditure in a fiscal year which creates assets for the government and causes reduction in liabilities for the government. For example: expenditure on lands and building, purchase of shares, expenditure on machinery and equipment.
Question 4
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One of the other two components of Revenue budget are:

A
Income budget

B
Budget Expenditure

C
Investment Expenditure

D
Revenue expenditure

Solution

Revenue budget has two components. Revenue receipts and reveneue expenditure.
Revenue expenditure refers to the estimated expenditure of the government in a fiscal year which does not create assets or cause a reduction in liabilities.
Question 5
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Fiscal deficit:

A
Indicates borrowings by the govt.

B
Indicates investments by the govt.

C
Indicates revenue of the govt.

D
Indicates deficit in expenditures by the govt.

Solution

It is equal to the excess of total expenditure over the sum of revenue receipts and capital receipts excluding borrowings. It actually reflects the total borrowings of the govt during the financial year.
Question 6
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At what point the primary deficit under the government budget tends to be zero?

A
When the revenue deficit tends to be zero.

B
When the net interest payment is zero.

C
Fiscal deficit = interest payment.

D
Zero fiscal deficit.

Solution

The gap here between the interest on borrowing and the fiscal deficit is referred to as the primary deficit. The primary deficit tends to be zero when the fiscal deficit equals the interest payment.
Question 7
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The borrowings under the government budget constitute –

A
Revenue deficit

B
Primary deficit

C
Taxes deficit

D
Fiscal deficit

Solution

Borrowings under the government budget contribute to the fiscal deficit. The fiscal deficit represents the difference between total government expenditure and total revenue (including borrowings), reflecting the government's borrowing requirements to finance its expenses. Therefore, option D, fiscal deficit, accurately describes the category to which government borrowings belong.
Question 8
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One of the objectives of the government budget is:

A
Reallocation of income and wealth

B
Distribution of income and wealth

C
Redistribution of income only

D
Regeneration of income and wealth

Solution

The distribution of income and wealth is higly unequal in countries like India. By imposing taxes on the rich and giving subsidies to the poor, the government redistributes income in favour of the poorer sections of the society.
Question 9
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Which of the following is a budget type?

A
Balanced budget

B
Surplus budget

C
Deficit budget

D
All of the above

Solution

A budget can be a balanced budget, deficit budget or a surplus budget.
Question 10
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Among the following options, which of these is a capital receipt?

A
Tax received

B
Dividend received

C
Disinvestment

D
External grants

Solution

Capital receipts refer to those receipts that either decrease assets or raise liabilities. Disinvestment causes asset depreciation.

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Re-Attempt Weekly Quiz Competition

The Government: Budget and the Economy Test - 32

Result

The Government: Budget and the Economy Test - 32

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Rank

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SHARING IS CARING

Question 1

Interest payments

Borrowings

Borrowings minus interest payments

Interest payments minus borrowings

Solution

Question 2

Revenue deficit – interest payments

Capital expenditure – revenue expenditure

Fiscal deficit – revenue deficit

Fiscal deficit – interest payments

Solution

Question 3

Subsidies

Share purchases

Defence purchases

Interest payments

Solution

Question 4

Income budget

Budget Expenditure

Investment Expenditure

Revenue expenditure

Solution

Question 5

Indicates borrowings by the govt.

Indicates investments by the govt.

Indicates revenue of the govt.

Indicates deficit in expenditures by the govt.

Solution

Question 6

When the revenue deficit tends to be zero.

When the net interest payment is zero.

Fiscal deficit = interest payment.

Zero fiscal deficit.

Solution

Question 7

Revenue deficit

Primary deficit

Taxes deficit

Fiscal deficit

Solution

Question 8

Reallocation of income and wealth

Distribution of income and wealth

Redistribution of income only

Regeneration of income and wealth

Solution

Question 9

Balanced budget

Surplus budget

Deficit budget

All of the above

Solution

Question 10

Tax received

Dividend received

Disinvestment

External grants

Solution

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