Free Understanding the Budget 03 Practice Test - 12th Grade - Commerce
Question 1
Which one of the situations is more desirable?
Situation ASituation BRevenue - 100 croresRevenue - 500 croresExpenditure - 100 croresExpenditure - 100 crores
Situation A
Situation B
Both are equally desirable
None of the above
SOLUTION
Solution : B
A surplus budget is preferred over a balanced budget as this allows more money to be invested in liquid savings assets or illiquid assets like land. Situation B depicts a surplus budget whereas Situation A is a balanced budget. Therefore, Situation B is more desirable.
Question 2
In case of a natural calamity such as an earthquake, money can be withdrawn from the:
Public Accounts
Contingency Fund of India
Consolidated Fund of India
Any of the above
SOLUTION
Solution : B
In case of a natural calamity such as an earthquake, money can be withdrawn from the Contingency Fund of India.
Question 3
In the context of government budget, which of the following statements is correct?
Budget is a statement of expected annual receipts and expenditures of the government.
It is a detailed account of actual receipts and expenditures of the government in a financial year.
It offers a detailed description of achievements of the government during the five year plans.
It indicates the balance of payments status of the domestic economy.
SOLUTION
Solution : A
Budget mentions expected annual receipts and expenditures of the government.
Question 4
Which of the following are the objectives of government budget?
Redistribution of income and wealth
Economic stability
GDP growth
All of these
SOLUTION
Solution : D
All of the options are objectives of the government budget.
Question 5
A tax, the burden of which can be shifted on to others, is called:
indirect tax
direct tax
wealth tax
none of these
SOLUTION
Solution : A
A tax, the burden of which can be shifted on to others, is called indirect tax.
Question 6
Tax that is imposed on value added at the various stages of production is known as
corporate profit tax
direct personal tax
value-added tax
none of these
SOLUTION
Solution : C
Tax that is imposed on value added at the various stages of production is known as value-added tax.
Question 7
Taxes like wealth tax and gift tax in India which carry their significance only on paper and have no significance in terms of revenue yield are called
indirect tax
direct tax
value added tax
paper taxes
SOLUTION
Solution : D
Taxes like wealth tax and gift tax in India which carry their significance only on paper and have no significance in terms of revenue yield are called paper taxes.
Question 8
Which of the following is NOT a non-tax receipt?
Fees
Fines
Gift tax
Grants and donations
SOLUTION
Solution : C
Gift tax belonged to direct taxes which does not have much significance in terms of revenue yield. It is not a non-tax receipt.
Question 9
The government budget of a hypothetical economy presents the following information, which of the following value represents Budgetary Deficit? (all fig. in crores of Rupees).
A. Revenue Expenditure = 25,000
B. Capital Receipts = 30,000
C. Capital Expenditure = 35,000
D. Revenue Receipts = 20,000
E. Interest Payments = 10,000
F. Borrowings = 20,000
Rs 12,000 crore
Rs 10,000 crore
Rs 20,000 crore
None of the above
SOLUTION
Solution : B
Budgetary Deficit = Total Expenditures - Total Receipts
= (Revenue Expenditure + Capital Expenditure) - (Revenue Receipts + Capital Receipts)
= (Rs 25,000 crore + Rs 35,000 crore) - (Rs 20,000 + Rs 30,000 crore)
= Rs 60,000 crore - Rs 50,000 crore
= Rs 10,000 crore
Question 10
Which of the following statement is true?
Loans from IMF are revenue receipts.
A higher revenue deficit necessarily leads to a higher fiscal deficit.
Borrowing by a government represents a situation of fiscal deficit.
Revenue deficit is the excess of capital receipts over the revenue receipts.
SOLUTION
Solution : C
When there is a fiscal deficit, the government gets to borrow.