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Choose the most appropriate option: 1) a) b) c) d) Which of the following is a current receipt in the government budget of a country? Sale of assets by the government Interest received on loans given Transfer receipts b and c
2) When the Revenue Deficit of the government rises or if the current expenditure by the government is more than the current receipts it gets it indicates that: a) b) c) d) There is a building up of a potential debt trap for the government There is an increased use of capital receipts for revenue expenditure a and b None of the above
3) In India , Primary deficit relates to: a) b) c) d) Fiscal deficit + interest payments All liabilities of the government Fiscal deficit ± interest payments None of the above
4) The Japanese economy is stuck in a recessionary gap. The proper fiscal policy could include a) decrease in taxes. b) increase in government purchases. c) increase in transfer payments. d) All of the above
increase in taxes. larger federal deficits. lower net exports. higher unemployment. b. d. the appropriate fiscal policy is a a.I5) If the federal government wishes to move the economy out of a recessionary gap. b. None of the above is correct. c. Increasing government spending Reducing transfer payments Raising taxes Decreasing government expenditure 7) Which of the following is not considered as financing the fiscal deficit in India? a) b) c) d) 8 Market borrowings Government external borrowings Disinvestment of PSUs None of the above 8) Contractionary fiscal policy ( reduction in government expenditure or increase in taxes) may have some undesirable consequences. c. d. c. Among these is a. d. decrease in transfer payments. higher inflation. 6) Which of the following is not a method to reduce inflation through fiscal policy? a. decrease in government purchases. . b.
putting further pressure on the current account and on the need for India to attract capital inflows to avoid pressure on its currency.´ 9) What kind of pressure on the currency would capital inflows prevent? a) b) c) d) Appreciation of rupee Depreciation of rupee Outflow of rupee None of the above 10) Which of the following are capital inflows which can solve the problem? a) b) c) d) NRI remittances from abroad Loans taken from abroad a and b None of the above .sUse the following newspaper clipping to answer questions 9 and 10 ³India's trade deficit swelled in July 2010 to its biggest level in almost two years.