CUET Economics MCQs Unit VI Government Budget and the Economy

Question : 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 : 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

Question : 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 : (a) Budget is a statement of expected annual receipts and expenditure is correct?

Question : 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 : (c) Both (a) and (b) 

Question : 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

Question : 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

Question : 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

Question : 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

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

Answer: (c) Finance Minister

Question : 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)

Question : 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

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

Answer: (d) All of these

Question : 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

Question : 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 : 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

Answer: (a) Capital Expenditure

Question : 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 : (c) Both (a) and (b) 

Question : 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 : (b) More than its budget receipts 

Question : 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)

Question : 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 : 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

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

Answer: (d) All of these

Question : 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

Question : Borrowing in the government budget is:
(a) Revenue deficit
(b) Fiscal deficit
(c) Primary deficit
(d) Deficit in taxes

Answer: (b) Fiscal deficit

Question : 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

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

Answer: (b) State Government

Question : 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 : (b) Charged at a decreasing rate when income of the individual increases

Question : 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

Question : How many types of revenue receipts are there?
(a) 2
(b) 3
(c) 4
(d) 6

Answer: (a) 2

Question : 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

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

Answer: (a) Annual

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

Answer: (c) 1 year

Question : Which one of the following is indirect tax ?
(a) Wealth tax
(b) Excise duty
(c) Income tax 
(d) None of these

Answer : (b) Excise duty

Question : 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

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

Answer: (c) Excise Duty

Question : 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 : 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

Question : 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

Question : Which of the following are capital receipts of the government ?
(a) Recovery of loans
(b) Borrowings
(c) Disinvestment 
(d) All of these

Answer : (d) All of these

Question : 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)

Question : 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)

Question : 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

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

Answer: (c) Finance Minister

Question : 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 : (a) Total expenditure – total receipt other than borrowing

Question : 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

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

Answer: (c) Both (a) and (b)

Question : 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 : 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 : 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 : (b) Estimated revenue of the government > estimated expenditure of the government

Question : 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

Question : 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 : 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 : The non-tax revenue in the following is:
(a) Export duty
(b) Import duty
(c) Dividends
(d) Excise

Answer: (c) Dividends

Question : Which of the following is a non- tax receipt ?
(a) Gift tax
(b) Sales tax 
(c) Gift and grants
(d) Excise duty

Answer : (c) Gift and grants