CBSE Class 12 Ecomonics - Government Budget and the Economy

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CBSE Class 12 Ecomonics - Government Budget and the Economy. Learning the important concepts is very important for every student to get better marks in examinations. The concepts should be clear which will help in faster learning. The attached concepts made as per NCERT and CBSE pattern will help the student to understand the chapter and score better marks in the examinations.


• Meaning of the Budget
• Objectives of the Budget
•Components of the Budget
• Budget Receipts
• Budget Expenditure
• Balanced, Surplus and Deficit Budgets
• Types of Deficits



1. Define a Budget.

Ans: It is an annual statement of the estimated Receipts and Expenditures of the Government over the fiscal year which runs from April –I to March 31.

2. Name the two broad divisions of the Budget.
Ans: i) Revenue Budget
ii) Capital Budget

3. What are the two Budget Receipts?

Ans: i) Revenue Receipts
ii) Capital Receipts

4. Name the two types of Revenue Receipts.
Ans: i) Tax Revenue
ii) Non-tax Revenue

5. What are the two types of taxes?

Ans: a) Direct Taxes: i) Income Tax, ii) Interest Tax, iii) Wealth Tax

b) Indirect Taxes: i) Customs duties, ii) Excise duties, iii) Sales Tax

6. What are the main items of Capital Receipts?

Ans: a) Market Loans (loans raised by the government from the public)

b) Borrowings by the Government

c) Loans received from foreign governments and International financial Institutions.

7. Give two examples of Developmental Expenditure.

Ans: Plan expenditure of Railways and Posts

8. Give two examples of Non-Developmental expenditures.

Ans: i) Expenditure on defence
ii) Interest payments

9. Define Surplus Budget.

Ans: A Surplus Budget is one where the estimated revenues are greater than the Estimated

10. What are the four different concepts of Budget Deficits?

Ans: a) Budget Deficit

b) Revenue Deficit

c) Primary Deficit and

d) Fiscal Deficit


1. Explain the objectives of the Government Budget.

Ans: These below are the main objectives of the Government Budget.
a) Activities to secure reallocation of resources: - The Government has to reallocate resources with social and economic considerations.

b) Redistributive Activities: - The Government redistributes income and wealth to reduce inequalities.

c) Stabilizing Activities: - The Government tries to prevent business fluctuations and maintain economic stability.

d) Management of Public Enterprises: - Government undertakes commercial activities that are of the nature of natural Monopolies, heavy manufacturing etc., through its public enterprises

2. What are the components of the Budget?
Ans: These below are the main components of the Government Budget. They are---

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