• Manoj Jha in CBSE 3 years ago

GOVERNMENT BUDGET IMPORTANT QUESTIONS CBSE

GOVERNMENT  BUDGET  IMPORTANT QUESTIONS CBSE

Must solve these questions from the topic – Government Budget important questions CBSE

DEFINE THE FOLLOWING TERMS

  1. Government Budget.
  2. Revenue budget and capital budget.
  3. Tax and non-tax receipts.
  4. Fiscal deficit.
  5. Revenue deficit.
  6. Primary deficit.
  7. Direct and indirect tax .

Also Read – 

  1. GOVERNMENT BUDGET NOTES CBSE CLASS 12 – MACRO ECONOMICS
  2. BANKING NOTES CBSE CLASS 12 – MACRO ECONOMICS
  3. MONEY AND BANKING IMPORTANT QUESTIONS – MACRO ECONOMICS
  4. GOVERNMENT BUDGET IMPORTANT QUESTIONS – MACRO ECONOMICS

Defend or refute the following statements with reason:

  1. Government budget is a statement of all actual receipt and payments of the government.
  2. Expenditure on law and order is a component of development expenditure.
  3. Fiscal deficit is zero in case there is no provision for borrowing in the government budget.
  4. Revenue deficit is the excess of capital receipt over and above revenue receipts of the government.
  5. Primary deficit does not include interest payments, while fiscal deficit does.
  6. Revenue receipts do not impact asset and liability status of the government.
  7. Revenue expenditure reduces assets of the government.
  8. Capital receipts add to liabilities of the government.
  9. Capital expenditure reduces capital stock of the government.
  10. Borrowing by the government is a component of revenue budget.
  11. Disinvestment is a component of capital budget.
  12. Disinvestment increases liabilities of the government.
  13. Recovery of loan by the government is a component of revenue budget.

Write your comment on each of the following statements in a sentence or two:

  1. Borrowing by the government is a measure of revenue deficit.
  2. Tax is a capital receipt of the government.
  3. Repayment of loan by the government is a capital expenditure.
  4. Sales tax is a direct tax.
  5. A regressive tax causes a greater real burden on the rich.
  6. Income tax in India is regressive in nature.
  7. Loans offered by the central government to the state government are to be treated as capital expenditure of the central government.
  8. Payment of interest is a capital expenditure.
  9. Subsidies are not treated as capital expenditure of the government.
  10. Grants by the government are treated as revenue expenditure.
  11. Construction of fly-over is a revenue expenditure of the government.
  12. Primary deficit is equal to revenue deficit reduced by interest payments.
  13. Other things remaining constant, fiscal deficit increases when the government revises salary structure of its employees, but the primary deficit remains the same.
  14. Fiscal deficit is only a part of primary deficit.
  15. Higher revenue deficit always means higher fiscal deficit.

Complete the following sentences:

  1. Subsidies are the revenue expenditure, because______________________.
  2. Borrowing is not revenue expenditure because______________________.
  3. Other things remaining constant, if tax rates are increased, fiscal deficit ___________________________.
  4. Two examples of deficit of direct tax are (i) ____________________ and (ii) _________________________________.
  5. Two examples of non- tax receipt are (i) ____________________ and (ii) _________________________________.
  6. Three components of capital receipt are (i) ____________________, (ii)___________________and (iii) ___________________________.
  7. Two principal components of revenue receipt are (i) ____________________ and (ii) _________________________________.
  8. Two examples of non- development expenditure are (i) ____________________ and (ii) _________________________________.
  9. Dividends on investment is not a capital receipt because _______________________.
  10. Mounting fiscal deficit is bad because _________________________

 ALSO READ 

  1. GOVERNMENT BUDGET NOTES CBSE CLASS 12 – MACRO ECONOMICS
  2. BANKING NOTES CBSE CLASS 12 – MACRO ECONOMICS
  3. MONEY AND BANKING IMPORTANT QUESTIONS – MACRO ECONOMICS
  4. GOVERNMENT BUDGET IMPORTANT QUESTIONS – MACRO ECONOMICS

MULTIPLE CHOICE QUESTIONS

Q.1 Which of the following is an Indirect Tax?

i) Income Tax ii) Entertainment Tax iii) Profit Tax iv) Wealth Tax

Q.2 Which of the following is a Direct Tax?

i) Sale Tax ii) Income Tax iii) Value Added Tax iv) Entertainment Tax

Q.3 Which of the following is a Revenue Receipt?

i) Loan from the IMF ii) Grant Received from the world Bank

iii) Borrowing from the Public iv) Sale of the shares held by the government in HMT

Q.4 Which of the following is a Capital Receipt?

i) Profit Tax ii) Railway Ticket Fare

iii) Fee of the Government Hospital iv) Borrowing from the public

Q.5 Pick the Odd one out from the following

i) Borrowing from the public ii) Borrowing from the International Financial Organizations .

iii) Borrowing from the RBI iv) Recovery of Loans

Q.6 Which of the following is not Capital Expenditure:

i) Salary paid to the government employees ii) Purchase of a machine from Korea

iii) Repayment of loan taken from the IMF iv) Interest paid on National Debt

Q.7 Which one of the following is not the form of Tax Revenue?

i) Income Tax ii) sales Tax iii) License Tax iv) Excise Duty

Q.8 Identify the Revenue Expenditure

i) Subsidies ii) Loan given to the state Government

iii) Repayment of loans iv) Construction of a school building

Q.9 Identify the capital Receipts

i) Penalty

ii) Corporation Tax

iii) Dividends on investments made by the government

iv) Sale of a Public Sector Undertaking

Give one word for the following:

  1. This consists of the revenue receipts of the government (tax revenues and other revenues) and the expenditure met from these revenues.
  2. These comprise proceeds of the taxes and other duties levied by the Union.
  3. These receipts of government mainly consist of interest and dividend on investments made by the government, fee and receipt for other services rendered by government.
  4. This consists of capital receipts and payments. It also incorporates transactions in the Public Account.
  5. Tax levied by government on the income and wealth received by households and businesses.
  6. A tax levied by government on goods and services.

1 MARK QUESTIONS

  1. What is a Government budget?
  2. What is a progressive tax?
  3. Give two examples of non-tax revenue receipt.
  4. How does a tax differ from a fee?
  5. Why is repayment of a loan a capital expenditure?
  6. Why is payment of interest a revenue expenditure?
  7. Why are subsidies treated as revenue expenditure?
  8. Why are borrowing treated as capital receipts?
  9. Define a fiscal deficit.
  10. When will there be a revenue deficit in a government budget?
  11. Define primary deficit.
  12. Why is income tax a direct tax?
  13. A government budget shows a primary deficit of Rs 4,400 crores. The revenue expenditure on interest payment is Rs 400 crores. How much is the fiscal deficit?
  14. Name two types of expenditures in the budget that can reduce income inequalities.
  15. In a Government budget, revenue deficit it is Rs 50,000 crores and borrowings are Rs 75,000 crores. How much is the fiscal deficit?

Must solve these questions from the topic – Government Budget important questions CBSE

The following questions are for 3/4 marks:

  1. What is a Government budget? Name two sources each of non- tax revenue receipt and capital receipt.
  2. Distinguish between (a) Revenue receipts and capital receipts. (b) Direct tax and indirect tax.
  3. What is the basis of classifying Government receipt into revenue receipt and capital receipt? Give an example of each.
  4. What is the basis of classifying Government expenditure into revenue expenditure and capital expenditure? Explain with the help of examples.
  5. Giving reasons categorize the following into revenue receipt and capital receipt: (A) Recovery of loans  (B) Dividends on investments made by the Government (C) Corporation tax . (D) Sale of a public sector unit
  6. Giving reasons, categorize the following into revenue expenditure and capital expenditure: –  i. ) Subsidies ii.) Grants given to state Government . iii.) Repayment of loans . iv. )Construction of school buildings.
  7. What is meant by revenue deficit? State two measures to reduce this deficit.
  8. Explain the meaning and implications of fiscal deficit.
  9. Define fiscal deficit. If the fiscal deficit is high, why does the government try to reduce it?
  10. ‘The fiscal deficit gives the borrowing requirement of the government’. Elucidate.
  11. What is the relationship between revenue deficit and fiscal deficit?
  12. Is fiscal deficit necessarily inflationary?
  13. Explain the term “debt trap.”
  14. Explain briefly any two objectives of a Government budget.
  15. How can a government budget help in reallocation of resources in an economy?
  16. Name the different types of deficits in the government of India’s budget. Explain any one.
  17. How can government budget be helpful in altering distribution of income in an economy?

 

Must solve these questions from the topic – Government Budget important questions CBSE

HOTS

  1. The three functions of allocation, redistribution and stabilization operate through the expenditure and receipts of the government.
  2. Name one step the government can take through its fiscal measures to check inflationary tendencies?
  3. What does a low primary deficit indicate?
  4. Can there be fiscal deficit without a revenue deficit?
  5. Can all grants to State Governments/Union territories and other parties be treated as revenue expenditure even though some of the grants may be used for creation of assets?

Must solve these questions from the topic – Government Budget important questions CBSE

NUMERICALS

  1. Calculate Revenue deficit, fiscal deficit, primary deficit from the following data. (Values are in CRORES)
  1. Revenue expenditure = 22,250
  2. Capital expenditure = 28,000
  3. Revenue receipts = 17,750
  4. Capital receipts = 20,000
  5. Interest payments = 5,000
  6. Borrowings = 12,500

2. Find borrowing by Government if payments of interest is estimated to be of 15,000 crores which is 25% of primary deficit.

3. Calculate revenue deficit from the following data: (in Rs crores)

  1. Income tax receipts = 70
  2. Grants to state governments = 65
  3. Loans from World Bank = 40
  4. Administrative revenue = 50
  5. Expenditure on subsidies = 165
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