XII ECONOMICS (Government Budget)

7/31/2021 XII ECONOMICS (Government Budget)
XII ECONOMICS (Government

Budget)
Maximum Marks: 30
Time: 60 Minutes
General Guidelines:
1) Answer all the questions as directed.
2) Marks are indicated against each question.
3) Read every question carefully before choosing the correct option.
1. Write your full name *
SOMYA AGGARWAL
2. The non-tax revenue in the following is: *

(1 Point)
Export duty
Excise
Import duty
Dividends
3. Money spent by the government on MGNREGA is considered as *

(1 Point)
Capital Receipts
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Revenue Receipts
Capital Expenditure
Revenue Expenditure
4. Zero primary deficit means *

(1 Point)
there are no interest payments
amount of borrowings is equal to the principal amount of loan
the government has to resort to borrowings only to make interest payments
None of the above
5. A large amount of X gives a signal to the government either to cut its expenditure
or increase its tax receipts. What is X here? *
(1 Point)
budget
revenue deficit
primary deficit
fiscal deficit
6. The annual government budget is presented by *

(1 Point)
President
Prime Minister
Finance Minister
None of the above
7. The government provides more resources into socially productive sectors where
the private sector is not coming, e.g., sanitation, water supply, rural development,
education, health, etc. Which objective of the government budget is highlighted
here? *
(1 Point)
Economic growth
Reallocation of Resources
Price stability/Economic stability
Reduction of Poverty and Unemployment
8. Estate duty is a *
(1 Point)
Direct Tax
Indirect Tax
Progressive Tax
Regressive Tax
9. Which of the following is a non-debt creating capital receipts *

(1 Point)
Borrowings
Disinvestment
Recovery of Loans
Both Disinvestment & Recovery of Loans
10. Government receives financial help from foreign governments and international
organizations in the form of grants, donations, gifts, and contributions. Where will
you classify such transaction? *
(1 Point)
Revenue Receipt
Capital Receipt
11. What can be the Remedial measures for correcting revenue deficit? *
(1 Point)
Government should raise rate of taxes especially on rich people
Government should try to reduce its expenditure
Government should levy new taxes where possible
All of the above
12. If the budgetary deficit of the government is Rs 35,000 crores and the borrowings
or other liabilities are Rs 12,000 crores, how much will be the fiscal deficit? *
(1 Point)
12,000
23,000
47,000
35,000
13. From the following data about a government budget calculate Primary deficit:
(in cr)
(i) Revenue deficit 40
(ii) Non-debt creating capital receipts 190
(iii) Tax revenue 125
(iv) Capital expenditure 220
(v) Interest payments 20 *

(2 Points)
50 CR
14. Which of the following is not true for revenue deficit?
A revenue deficit: *
(1 Point)
implies that the government is dissaving and is using up the savings of the other
sectors of the economy.
means that the government will have to borrow not only to finance its investment but
also its consumption expenditure requirements.
focuses on present fiscal imbalances.
leads to build up of stock of debt and interest liabilities; and forces the government,
eventually, to cut productive capital expenditure or welfare expenditure. This would
mean lower growth and adverse welfare implications.
15. Fiscal deficit will have to be financed through _____________. *

(1 Point)
(a) Primary deficit
(b) Revenue deficit
(c) Borrowings
(d) Taxes
16. Fiscal deficit = Total expenditure – (Revenue receipts + _______) *

(1 Point)
CAPITAL RECEIPTS EXCLUDING BOROWINGS
17. Fiscal deficit indicates the total borrowing requirements of the
government from all sources. *

(1 Point)
True
False
18. Revenue deficit is a part of fiscal deficit. *

(1 Point)
True
False
19. Primary deficit in a government budget will be zero, when_____. *

(1 Point)
(a) Revenue deficit is zero
(b) Fiscal deficit is zero
(c) Total borrowing is equal to interest payments.
(d) Net interest payments is zero.
20. Assertion A : Fiscal deficit is greater than budgetary deficit.
Reason R : Fiscal deficit is the borrowing from the Reserve Bank of India plus other
liabilities of the Government to meet its expenditure. *
(1 Point)
Both A and R are true and R is the correct explanation of A
Both A and R are true but R is not a correct explanation of A
A is true but R is false
A is false but R is true
21. Which of the following is an example of direct tax? *

(1 Point)
VAT
Excise duty
Entertainment tax
Wealth tax
22. When government spends more than it collects by way of revenue, it incurs ______
*
(1 Point)
Budget surplus
Budget deficit
Capital expenditure
Revenue expenditure
23. Assertion- The fiscal deficit in the economy will be zero if there is no provision for
borrowing in the budget
Reason-Fiscal deficit is equal to total borrowing requirement of the economy *

(1 Point)
Both Assertion and Reason are true and Reason is the correct explanation of Assertion
Both Assertion and Reason are true and Reason is not the correct explanation of
Assertion
Assertion is true but Reason is false
Assertion is false but Reason is true
24. ASSERTION ( Government Budget is an estimated statement of government

expenditure and government receipts in an accounting year
REASON ( Government through its budget tries to reduce the regional inequalities
*
(1 Point)
Assertion
25. Assertion ( Fiscal deficit always lead to burden on future generation
Reason ( Interest payments and repayment of loans taken today would have to be
paid in future thereby increasing tax burden on future generations *
(1 Point)
Assertion
26. Assertion ( Even if there is a revenue deficit in the government budget it may have
a surplus in fiscal budget
Reason ( Non debt capital receipts can be more than the capital expenditure of the
government *
(1 Point)
Assertion
SOURCE BASED QUESTION- Answer the following questions related

to the case study
India to spend money, not worry about widening fiscal gap - Nirmala Sitharaman
India will not worry about missing its budget deficit target as it seeks to step up spending to support
the economy, Finance Minister Nirmala Sitharaman said.
Sitharaman who reviews government expenditure every 15 days, said she will push state firms to
accelerate spending. Prime Minister Narendra Modi last month expanded support measures to 30
trillion rupees ($120 billion), or
15% of the economy, to rescue companies and save jobs lost due to the coronavirus pandemic, adding
to global stimulus that has touched $12 trillion.
Economists see the additional spending, along with falling tax revenue, pushing India’s budget gap
wider to 8% of gross domestic product in the current financial year, more the double the targeted 3.5%
Source Economic Times, 8 12 2020
27. Falling tax revenue would definitely lead to *

(1 Point)
Increase in revenue deficit
Increase in revenue expenditure
Increase in fiscal deficit
Increase in primary deficit
28. ..“State firms to accelerate spending This will definitely lead to *

(1 Point)
increase in aggregate demand in the economy
increase in inflationary pressures
decrease in aggregate supply
Increase in revenue deficit
29. Suppose that in an economy the revenue deficit of the government is estimated as
Rs 50 000 crores During the same year, the capital expenditure accounted for Rs
40 000 crores whereas the capital receipts (excluding borrowings) of the
government were Rs 30 000 crores The value of fiscal deficit in the government for
the given year will be *
(1 Point)
Rs 40,000 crores
Rs 1 ,20, 000 crores
Rs 60 ,000 crores
Rs 20 ,000 crores
30. The government budget has a revenue deficit This gets financed by *
(1 Point)
Indirect taxes and borrowing
tax revenue and borrowing
borrowing and disinvestment
tax revenue and indirect taxes
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7/31/2021 XII ECONOMICS (Government Budget)

XII ECONOMICS (Government

1) Answer all the questions as directed.

2) Marks are indicated against each question.

3) Read every question carefully before choosing the correct option.

1. Write your full name *

2. The non-tax revenue in the following is: *

3. Money spent by the government on MGNREGA is considered as *

4. Zero primary deficit means *

there are no interest payments

amount of borrowings is equal to the principal amount of loan

the government has to resort to borrowings only to make interest payments

None of the above

6. The annual government budget is presented by *

None of the above

Price stability/Economic stability

Reduction of Poverty and Unemployment

9. Which of the following is a non-debt creating capital receipts *

Both Disinvestment & Recovery of Loans

Government should raise rate of taxes especially on rich people

Government should try to reduce its expenditure

Government should levy new taxes where possible

All of the above

(i) Revenue deficit 40

(ii) Non-debt creating capital receipts 190

(iii) Tax revenue 125

(iv) Capital expenditure 220

(v) Interest payments 20 *

14. Which of the following is not true for revenue deficit?

focuses on present fiscal imbalances.

15. Fiscal deficit will have to be financed through _____________. *

(a) Primary deficit

(b) Revenue deficit

16. Fiscal deficit = Total expenditure – (Revenue receipts + _______) *

CAPITAL RECEIPTS EXCLUDING BOROWINGS

17. Fiscal deficit indicates the total borrowing requirements of the

government from all sources. *

18. Revenue deficit is a part of fiscal deficit. *

19. Primary deficit in a government budget will be zero, when_____. *

(a) Revenue deficit is zero

(b) Fiscal deficit is zero

(c) Total borrowing is equal to interest payments.

(d) Net interest payments is zero.

20. Assertion A : Fiscal deficit is greater than budgetary deficit.

Both A and R are true and R is the correct explanation of A

Both A and R are true but R is not a correct explanation of A

A is true but R is false

A is false but R is true

21. Which of the following is an example of direct tax? *

Reason-Fiscal deficit is equal to total borrowing requirement of the economy *

Assertion is true but Reason is false

Assertion is false but Reason is true

24. ASSERTION ( Government Budget is an estimated statement of government

Assertion is true but Reason is false

Assertion is false but Reason is true

25. Assertion ( Fiscal deficit always lead to burden on future generation

Assertion is true but Reason is false

Assertion is false but Reason is true

Assertion is true but Reason is false

Assertion is false but Reason is true

SOURCE BASED QUESTION- Answer the following questions related

Source Economic Times, 8 12 2020

27. Falling tax revenue would definitely lead to *

Increase in revenue deficit