NCERT MCQ ON Government Budget and the Economy:

Question1:  In the context of government budget, which of the following statements is correct ?

• a) Budget is a statement of expected annual receipts and expenditure is correct?
• b) It is a detail of actual receipts and expenditures of the government in a financial year
• c) It offers a detailed description of achievements of the government during the 5 year plans
• d) It indicates  BoP status of the economy
  Answer :  Budget is a statement of expected annual receipts and expenditure is correct?

Question2 :  Which of the following are the objectives of government budget ?

• a) Redistribution of income and wealth
• b) Economy stability 
• c) Both (a) and (b) 
• d) None of these
  Answer :  Both (a) and (b) 

Question3 :  Which of the following is a non- tax receipt ?

• a) Gift tax
• b) Sales tax 
• c) Gift and grants         
• d) Excise duty
  Answer :  Gift and grants         

Question4 :  Regressive tax is that which is :

• a) Charged at an increasing rate when income of the individual increases 
• b) Charged at a decreasing rate when income of the individual increases
• c) Relatively a low percentage of an individual’s income
• d) A fixed percentage of an individual’s income
  Answer :  Charged at a decreasing rate when income of the individual increases

Question5 :  Which one of the following is indirect tax ?

• a) Wealth tax
• b) Excise duty
• c) Income tax 
• d) None of these
  Answer :  Excise duty

Question6 :  Which of the following are capital receipts of the government ?

• a) Recovery of loans
• b) Borrowings
• c) Disinvestment 
• d) All of these
  Answer :  All of these

Question7 :  Capital expenditure is that estimated expenditure of the government which?

• a) Assets are increased 
• b) liability is decreased 
• c) Both (a) and (b) 
• d) Assets and liabilities do not change
  Answer :  Both (a) and (b) 

Question8 :  Deficit budget refers to that situation in which government’s budget expenditure is :

• a) less than its budget receipts 
• b) More than its budget receipts 
• c) Equal to its budget receipts 
• d) None of these
• Answer :  More than its budget receipts 

Question9 :  Fiscal deficit=

• a) Total expenditure – total receipt other than borrowing
• b) Revenue expenditure- revenue receipts
• c) Capital expenditure – capital receipts
• d) Revenue expenditure + Capital expenditure – revenue receipts
  Answer :  Total expenditure – total receipt other than borrowing

Question 10:  Surplus budget is that budget where in :

• a) Estimated revenue of the government < estimated expenditure of the government
• b) Estimated revenue of the government > estimated expenditure of the government
• c) Estimated revenue of the government = estimated expenditure of the government
• d) None of these
  Answer :   Estimated revenue of the government > estimated expenditure of the government

Question 11: Which of the following is the capital expenditure of the government?
(a) Interest Payment
(b) Purchase of House
(c) Expenses on Machinery
(d) All of the above
Answer: (a) Interest Payment

Question12 : When government spends more than it collects by way of revenue, it incurs ______
(A) Budget surplus
(B) Budget deficit
(C) Capital expenditure
(D) Revenue expenditure
Answer: (B) Budget deficit

Question13 : Which of the following statement is true?
(a) Fiscal deficit is the difference between total expenditure and total receipts
(b) Primary deficit is the difference between total receipt and interest payments
(c) Fiscal deficit is the sum of primary deficit and interest payment
(d) All of these
Answer: (c) Fiscal deficit is the sum of primary deficit and interest payment

Question14 : Which is included in the Direct Tax?
(a) Income Tax
(b) Gift Tax
(c) Both (a) and (b)
(d) Excise Duty
Answer: (c) Both (a) and (b)

Question15 : The fiscal deficit is the difference between the government’s total expenditure and its total receipts excluding ______
(A) Interest
(B) Taxes
(C) Spending
(D) Borrowings
Answer: (D) Borrowings

Question 16: Which is included in Indirect Tax?
(a) Excise Duty
(b) Sales Tax
(c) Both (a) and (b)
(d) Wealth Tax
Answer: (c) Both (a) and (b)

Question17 : What is the annual statement of the government’s fiscal revenue and fiscal expenditure known?
(A) Budget
(B) Fiscal Budget
(C) Capital Budget
(D) All of these
Answer: (B) Fiscal Budget

Questio18 : An annual statement of the estimated receipts and expenditure of the government over the fiscal year is known as
(A) Budget
(B) Income estimates
(C) Account
(D) Expenditure
Answer: (A) Budget

Question 19: How many types of revenue receipts are there?
(A) 2
(B) 3
(C) 4
(D) 6
Answer: (A) 2

Question20 : Who issues 1 rupee note in India:
(a) Reserve Bank of India
(b) Finance Ministry of India
(c) State Bank of India
(d) None of these
Answer: (b) Finance Ministry of India

Question 21: The amount collected by the government as taxes and duties is known as _______
(A) Capital receipts
(B) Tax revenue receipts
(C) Non-tax revenue receipts
(D) All of these
Answer: (B) Tax revenue receipts

Question22 : Which is included in indirect tax?
(a) Income tax
(b) Wealth tax
(c) Excise Duty
(d) Gift tax
Answer: (c) Excise Duty

Question23 : The amount collected by the government in the form of interest, fees, and dividends is known as…….
(A) Tax-revenue receipts
(B) Capital receipts
(C) Non-tax revenue receipts
(D) None of these
Answer: (C) Non-tax revenue receipts

Question24 : Direct tax is called direct because it is collected directly from:
(A) The producers on goods produced
(B) The sellers on goods sold
(C) The buyers of goods
(D) The income earners
Answer: (D) The income earners

Question25 : Which objectives government attempts to obtain by Budget
(a) To Promote Economic Development
(b) Balanced Regional Development
(c) Redistribution of Income and Wealth
(d) All the above
Answer: (d) All the above

Question26 : Which of the following is an example of direct tax?
(A) VAT
(B) Excise duty
(C) Entertainment tax
(D) Wealth tax
Answer: (D) Wealth tax

Question27 : Which is a component of the Budget Receipt?
(a) Revenue Receipt
(b) Capital Receipt
(c) Both (a) and (b)
(d) None of the above
Answer: (c) Both (a) and (b)

Question28 : Which of the following is the component of a budget?
(A) Fiscal budget
(B) Capital budget
(C) Both of these
(D) None of these
Answer: (C) Both of these

Question29 : Tax revenue of the Government includes :
(a) Income Tax
(b) Corporate Tax
(c) Excise Duty
(d) All of these
Answer: (d) All of these

Question30 : Budget speech in Lok Sabha is given by:
(a) President
(b) Prime Minister
(c) Finance Minister
(d) Home Minister
Answer: (c) Finance Minister

Question31 : The expenditures which do not create assets for the government is called :
(a) Revenue Expenditure
(b) Capital Expenditure
(c) Both (a) and (b)
(d) None of the above
Answer: (a) Revenue Expenditure

Question32 : What is the period of a fiscal year?
(A) 1 April to 31 March
(B) 1 January to 31 December
(C) 1 March to 28 February
(D) None of these
Answer: (A) 1 April to 31 March

Question 33: Direct tax is :
(a) Income Tax
(b) Gift Tax
(c) Both (a) and (b)
(d) None of these
Answer: (c) Both (a) and (b)

Question34 : Which of the following is not a revenue receipt?
(a) Recovery of Loans
(b) Foreign Grants
(c) Profits of Public Enterprise
(d) Wealth Tax
Answer: (a) Recovery of Loans

Question35 : From the following which is included in the direct tax:
(a) Income Tax
(b) Gift Tax
(c) Both (a) and (b)
(d) Excise Tax
Answer: (c) Both (a) and (b)

Question36 : In India, one rupee note is issued by:
(a) Reserve Bank of India
(b) Finance Ministry of Government of India
(c) State Bank of India
(d) None of these
Answer: (b) Finance Ministry of Government of India

Question 37: The non-tax revenue in the following is:
(A) Export duty
(B) Import duty
(C) Dividends
(D) Excise
Answer: (C) Dividends

Question 38: Capital budget consist of:
(a) Revenue Receipts and Revenue Expenditure
(b) Capital Receipts and Capital Expenditure
(c) Direct and Indirect Tax
(d) None of these
Answer: (b) Capital Receipts and Capital Expenditure

Question 39: Financial Year in India is:
(a) April I to March 31
(b) January 1 to December 31
(c) October 1 to September 30
(d) None of the above
Answer: (a) April I to March 31

Question40 : Which of the following is an indirect tax?
(a) Excise Duty
(b) Sales Tax
(c) Custom Duty
(d) All of these
Answer: (d) All of these

Question41 : Borrowing in the government budget is:
(A) Revenue deficit
(B) Fiscal deficit
(C) Primary deficit
(D) Deficit in taxes
Answer: (B) Fiscal deficit

Question42 : What is the duration of a Budget?
(a) Annual
(b) Two Years
(c) Five Years
(d) Ten Years
Answer: (a) Annual

Question43 : Which of the following is included in fiscal policy?
(a) Public Expenditure
(b) Tax
(c) Public Debt
(d) All of these
Answer: (d) All of these

Question44 : The budget may include:
(a) Revenue Deficit
(b) Fiscal Deficit
(c) Primary Deficit
(d) All of these
Answer: (d) All of these

Question 45: Budget:
(a) is a description of income-expenditure of government
(b) is a document of the economic policy of the government
(c) is a description of non-programs of the government
(d) All of these
Answer: (d) All of these

Question 46: In an unbalanced budget:
(a) Income is greater than expenditure
(b) Expenditure is higher relative to income
(c) Deficit is covered by loans or printing of notes
(d) Only (b) and (c)
Answer: (d) Only (b) and (c)

Question 47: Which one of the following is a pair of direct tax?
(a) Excise duty and Wealth Tax
(b) Service Tax and Income Tax
(c) Excise Duty and Service Tax
(d) Wealth Tax and Income Tax
Answer: (d) Wealth Tax and Income Tax

Question48 : Which of the following is a correct measure of the primary deficit?
(a) Fiscal deficit minus revenue deficit
(b) Revenue deficit minus interest payments
(c) Fiscal deficit minus interest payments
(d) Capital expenditure minus revenue expenditure
Answer: (c) Fiscal deficit minus interest payments

Question49 : The primary deficit in a government budget will be zero, when _______
(A) Revenue deficit is zero
(B) Net interest payments are zero
(C) Fiscal deficit is zero
(D) Fiscal deficit is equal to interest payment
Answer: (D) Fiscal deficit is equal to interest payment

Question50 : The duration of the Government budget is:
(a) 5 years
(b) 2 years
(c) 1 year
(d) 10 years
Answer: (c) 1 year

Question 51: Budget is presented in the Parliament by:
(a) Prime Minister
(b) Home Minister
(c) Finance Minister
(d) Defence Minister
Answer: (c) Finance Minister

Question 52: Which of the following budget is suitable for developing economies?
(a) Deficit Budget
(b) Balanced Budget
(c) Surplus Budget
(d) None of these
Answer: (a) Deficit Budget

Question 53: Professional tax is imposed by:
(a) Central Government
(b) State Government
(c) Municipal Corporation
(d) Gram Panchayat
Answer: (b) State Government

Question54 : Which type of expenditure is made in bridge construction?
(a) Capital Expenditure
(b) Revenue Expenditure
(c) Both (a) and (b)
(d) None of the above