The Government: Budget and the Economy Test

Result

The Government: Budget and the Economy Test - 33

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Weekly Quiz Competition

Question 1
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Which type of expenditure is mentioned in five-year economic planning?

A
Revenue expenditure

B
Plan expenditure

C
Capital expenditure

D
Non-plan expenditure

Solution

Planned expenditure, usually mentioned under five-year plans can be of non-recurring or recurring in nature.
Question 2
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Revenue Receipts:

A
Create liability for the private sector

B
Create liability for the government

C
Do not create liability for the private sector

D
Do not create liability for the government

Solution

Any receipt which does not create any liability for the govt is a revenue receipt. Tax receipt is a revenue receipt because it does not involve any corresponding liability for the government.
Question 3
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Revenue Expenditure:

A
Create assets for the government

B
Do not create assets for the government

C
Creates assets for the private sector

D
Create liability for the private sector

Solution

Any expenditure by the govt which does not create any assets for them is a revenue expenditure. For eg. Wage bill of the govt, interest payments, defence purchases etc.
Question 4
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One of the Implication of Fiscal deficit is:

A
It increases the supply of money in the economy

B
It decreases the supply of money in the economy

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

D
It maintains 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 5
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Fiscal deficit is unhealthy for economic development as:

A
it is a cause of recession

B
it is a cause of prosperity

C
it is a cause of deflation

D
it is a cause of inflation

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 6
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A Balanced budget is one where:

A
Estimated revenues> estimated expenditure

B
Estimated revenues< estimated expenditure

C
Estimated revenues= estimated expenditure

D
All of the above

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 7
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One more of the two components of government budget are:

A
Capital budget

B
Investment budget

C
Income budget

D
Expenditure budget

Solution

Capital budget is a component of the government budget. It includes the capital receipts and capital expenditure of the governemnt.
Question 8
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Disinvestment is a:

A
Capital Receipts

B
Revenue Receipts

C
Revenue Expenditure

D
Capital Expenditure

Solution

Disinvestment is a capital receipt since it causes reduction in the assets of the govt. For eg. the money received by the govt by selling its shares (say of Maruti Udyog) causes reduction in the assets of the govt.
Question 9
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A surplus budget is one where:

A
Estimated revenues > estimated expenditure

B
Estimated revenues = estimated expenditure

C
Estimated revenues < estimated Receipts of the govt.

D
All of the above

Solution

surplus budget means a budget where the budgeted receipts > budgeted expenditure .
Question 10
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What is referred to as a primary deficit?

A
Interest payments

B
Borrowings

C
Both interest payments and borrowings

D
Borrowings minus interest payments

Solution

The gap between borrowing and interest on accrued earnings is referred to as the primary deficit.

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Re-Attempt Weekly Quiz Competition

The Government: Budget and the Economy Test - 33

Result

The Government: Budget and the Economy Test - 33

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Rank

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SHARING IS CARING

Question 1

Revenue expenditure

Plan expenditure

Capital expenditure

Non-plan expenditure

Solution

Question 2

Create liability for the private sector

Create liability for the government

Do not create liability for the private sector

Do not create liability for the government

Solution

Question 3

Create assets for the government

Do not create assets for the government

Creates assets for the private sector

Create liability for the private sector

Solution

Question 4

It increases the supply of money in the economy

It decreases the supply of money in the economy

It does not affect the supply of money in the economy

It maintains the supply of money in the economy

Solution

Question 5

it is a cause of recession

it is a cause of prosperity

it is a cause of deflation

it is a cause of inflation

Solution

Question 6

Estimated revenues> estimated expenditure

Estimated revenues< estimated expenditure

Estimated revenues= estimated expenditure

All of the above

Solution

Question 7

Capital budget

Investment budget

Income budget

Expenditure budget

Solution

Question 8

Capital Receipts

Revenue Receipts

Revenue Expenditure

Capital Expenditure

Solution

Question 9

Estimated revenues > estimated expenditure

Estimated revenues = estimated expenditure

Estimated revenues < estimated Receipts of the govt.

All of the above

Solution

Question 10

Interest payments

Borrowings

Both interest payments and borrowings

Borrowings minus interest payments

Solution

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