CA Economics Foundation – Government Budget and the Economy Multiple Choice Questions

The Process Of Budget-Making Sources Of Revenue Expenditure Management And Management Of Public Debt Introduction

Question 1. What is the primary purpose of the government budget?

1. To maximize government revenue through taxes.
2. To allocate resources efficiently in the economy.
3. To manage public debt and reduce fiscal deficits.
4. To outline the government’s financial plans and policies for the fiscal year.

Answer: 4. To outline the government’s financial plans and policies for the fiscal year.

Explanation:

The primary purpose of the government budget is to outline the government’s financial plans, policies, and priorities for the upcoming fiscal year, including sources of revenue, expenditure management, and debt management.

Question 2. Which of the following is considered a source of government revenue?

1. Issuing bonds and borrowing from international lenders.
2. Providing subsidies to low-income individuals.
3. Investing in infrastructure development.
4. Collecting taxes from individuals and businesses.

Answer: 4. Collecting taxes from individuals and businesses.

Explanation:

Collecting taxes from individuals and businesses is a significant source of government revenue.

Question 3. What is revenue expenditure in the government budget?

1. Investment in long-term assets like infrastructure.
2. Day-to-day expenses like salaries and subsidies.
3. Transferring funds to other levels of government.
4. Borrowing money from foreign countries.

Answer: 2. Day-to-day expenses like salaries and subsidies.

Explanation:

Revenue expenditure in the government budget refers to day-to-day expenses incurred by the government, such as salaries of government employees, subsidies, and other operational costs.

Question 4. How can the government manage public debt effectively?

1. By reducing taxes to increase disposable income.
2. By increasing government spending on social programs.
3. By ensuring that debt remains sustainable with manageable interest payments.
4. By borrowing more to fund large infrastructure projects.

Answer: 3. By ensuring that debt remains sustainable with manageable interest payments.

Explanation:

Effective management of public debt involves ensuring that the debt remains sustainable, with manageable interest payments and repayment obligations, to avoid fiscal crises.

Question 5. Why is the government budget subject to public debate and scrutiny?

1. To determine the profitability of government projects.
2. To assess the performance of government employees.
3. To evaluate the effectiveness of government policies.
4. To promote competition among different government agencies.

Answer: 3. To evaluate the effectiveness of government policies

Explanation:

The government budget is subject to public debate and scrutiny to evaluate the effectiveness of government policies and ensure that public funds are used efficiently to meet the needs of citizens.

Question 6. Which of the following is NOT a source of government revenue?

1. Income tax
2. Sales tax
3. Government grants to businesses
4. Corporate tax

Answer: 3. Government grants to businesses

Explanation:

Government grants to businesses are not a source of government revenue but rather an expenditure item in the budget.

Question 7. What is the difference between capital expenditure and revenue expenditure?

1. Capital expenditure relates to expenses on public infrastructure, while revenue expenditure relates to interest payments on public debt.
2. Capital expenditure includes investments in long-term assets, while revenue expenditure includes day-to-day expenses like salaries and subsidies.
3. Capital expenditure is funded through taxes, while revenue expenditure is funded through borrowing.
4. Capital expenditure is decided by the central bank, while revenue expenditure is decided by the finance ministry.

Answer: 2. Capital expenditure includes investments in long-term assets, while revenue expenditure includes day-to-day expenses like salaries and subsidies.

Explanation:

Capital expenditure involves investments in long-term assets like infrastructure, while revenue expenditure includes day-to-day expenses required for the normal functioning of the government.

Question 8. Why is effective management of public debt important for the government?

1. To maximize government profits.
2. To reduce government spending.
3. To ensure sustainable fiscal policy and debt repayment.
4. To encourage private investment in the economy.

Answer: 3. To ensure sustainable fiscal policy and debt repayment.

Explanation:

Effective management of public debt is important for the government to ensure that its fiscal policy remains sustainable, and it can meet its debt repayment obligations without facing financial crises.

Question 9. What is the ultimate goal of the budget-making process?

1. To maximize government control over the economy.
2. To minimize government interference in the market.
3. To achieve economic growth and development.
4. To promote fairness and social justice in resource distribution.

Answer: 4. To promote fairness and social justice in resource distribution.

Explanation:

The ultimate goal of the budget-making process is to promote fairness and social justice by allocating resources in a way that benefits the entire society and addresses the needs of various sections of the population.

Question 10. What is the process of budget making?

1. Planning, execution, evaluation
2. Revenue generation, expenditure management, debt management
3. Budget proposal, legislative approval, implementation
4. Financial forecasting, revenue estimation, expenditure estimation

Answer: 2. Budget proposal, legislative approval, implementation

Question 11. Which of the following is a source of revenue for the government?

1. Expenditure on public services
2. Public debt
3. Taxes
4. Budget deficit

Answer:  3. Taxes

Question 12. Which aspect of budgeting involves controlling and optimizing government spending?

1. Expenditure management
2. Debt management
3. Revenue generation
4. Budget forecasting

Answer:  1. Expenditure management

Question 13. What does the management of public debt refer to?

1. Generating revenue through borrowing
2. Allocating funds for public projects
3. Controlling government expenses
4. Managing loans and liabilities of the government

Answer: 4. Managing loans and liabilities of the government

Question 14. Which of the following is a part of the budget process that involves estimating the expected income and expenses for the upcoming period?

1. Budget approval
2. Budget implementation
3. Budget forecasting
4. Budget evaluation

Answer: 3. Budget forecasting

The Process Of Budget Making

Question 1. What is the first step in the process of budget-making?

1. Setting financial goals and objectives.
2. Estimating government revenue for the fiscal year.
3. Allocating funds to various ministries and departments.
4. Presenting the budget to the public.

Answer: 1. Setting financial goals and objectives.

Explanation:

The first step in the process of budget-making involves setting financial goals and objectives that the government aims to achieve in the upcoming fiscal year.

Question 2. Which government agency is responsible for preparing the budget in most countries?

1. The central bank.
2. The finance ministry or treasury department.
3. The department of taxation.
4. The ministry of economic planning.

Answer: 2. The finance ministry or treasury department.

Explanation:

In most countries, the finance ministry or treasury department is responsible for preparing the budget and coordinating with various government departments and agencies.

Question 3. The fiscal year for most governments typically runs from

1. January 1st to December 31st.
2. April 1st to March 31st.
3. July 1st to June 30th.
4. October 1st to September 30th.

Answer: 2. April 1st to March 31st.

Explanation:

The fiscal year for most governments typically runs from April 1st to March 31st of the following year.

Question 4. During the budget-making process, the estimation of government revenue includes.

1. Only tax revenue and non-tax revenue.
2. Tax revenue, non-tax revenue, and borrowing.
3. Tax revenue, non-tax revenue, borrowing, and grants.
4. Only borrowing and grants.

Answer: 3. Tax revenue, non-tax revenue, borrowing, and grants.

Explanation:

During the budget-making process, the estimation of government revenue includes various sources such as tax revenue, non-tax revenue (dividends, interest, etc.), borrowing (if necessary), and grants from international organizations or other countries.

Question 5. After the budget is prepared by the finance ministry, it is presented to

1. The president or prime minister.
2. The central bank governor.
3. The parliament or legislature.
4. The ministry of economic planning.

Answer: 3. The parliament or legislature.

Explanation:

After the budget is prepared by the finance ministry, it is presented to the parliament or legislature for approval and discussion before it becomes law. ‘

Question 6. The fiscal year in many countries typically runs from

1. January 1st to December 31st.
2. April 1st to March 31st.
3. July 1st to June 30,h.
4. October 1st to September 30th.

Answer:  2. April 1st to March 31st.

Explanation:

The fiscal year in many countries, including India, typically runs from April 1st to March 31st.

Question 7. Which government official is responsible for presenting the budget to the parliament or legislature?

1. The Prime Minister
2. The Finance Minister
3. The President
4. The Governor of the Central Bank

Answer: 2. The Finance Minister

Explanation:

The Finance Minister is responsible for presenting the budget to the parliament or legislature on behalf of the government.

Question 8. The “Budget Speech” usually includes

1. A detailed breakdown of individual taxpayers’ contributions.
2. Economic statistics of the previous fiscal year.
3. A list of government employees and their salaries.
4. Policy recommendations from opposition parties.

Answer: 2. Economic statistics of the previous fiscal year.

Explanation:

The “Budget Speech” typically includes economic statistics and performance indicators of the previous fiscal year, as well as the government’s economic and fiscal policy goals for the upcoming year.

Question 9. After the budget is presented, it is usually sent to

1. The President for approval.
2. The Supreme Court for review.
3. The Central Bank for implementation.
4. The Parliament or Legislature for approval and debate.

Answer: 4. The Parliament or Legislature for approval and debate.

Explanation:

After the budget is presented, it is usually sent to the Parliament or Legislature for approval and debate. The budget undergoes scrutiny and discussion before it is officially approved.

Question 10. Which stage of the budget-making process involves analyzing past performance, current economic conditions, and future projections?

1. Budget execution
2. Budget evaluation
3. Budget formulation
4. Budget authorization

Answer: 3. Budget formulation

Question 11. What is the primary purpose of the budget-making process?

1. Increasing government debt.
2. Controlling inflation
3. Allocating resources effectively
4. Reducing taxes

Answer: 3. Allocating resources effectively

Question 12. During which stage of the budget process is public input and feedback typically considered?

1. Budget authorization
2. Budget execution
3. Budget formulation
4. Budget evaluation

Answer: 3. Budget formulation

Question 13. Which government entity is responsible for approving and authorizing the final budget?

1. Central bank
2. Parliament/Congress
3. Ministry of Finance
4. International Monetary Fund(IMF)

Answer: 2. Parliament/Congress

Question 14. Which aspect of the budget-making process involves implementing the budgetary plans and disbursing funds?

1. Budget execution
2. Budget forecasting
3. Budget evaluation
4. Budget authorization

Answer: 1. Budget execution

 Sources Of Revenue

Question 1. Which of the following is a direct source of government revenue?

1. Sales tax
2. Corporate tax
3. Excise duty
4. Value Added Tax (VAT)

Answer: 2. Corporate tax

Explanation:

Corporate tax is a direct tax levied on the income of corporations and businesses, and it is a significant source of government revenue.

Question 2. What is the primary source of revenue for the government in many countries?

1. Personal income tax
2. Goods and Services Tax (GST)
3. Customs duties
4. Corporate tax

Answer: 1. Personal income tax

Explanation:

Personal income tax, which is levied on the income of individuals, is often the primary source of revenue for the government in many countries.

Question 3. Revenue from non-tax sources may include

1. Income tax from individuals.
2. Sales tax on goods.
3. Dividends from state-owned enterprises. ‘
4. Corporate tax from private companies.

Answer: 3. Dividends from state-owned enterprises.

Explanation:

Revenue from non-tax sources includes income generated from various non-tax activities, such as dividends from state-owned enterprises and interest income from loans given by the government.

Question 4. Which of the following is an indirect source of government revenue?

1. Property tax
2. Goods and Services Tax (GST)
3. Personal income tax
4. Corporate tax

Answer: 2. Goods and Services Tax (GST)

Explanation:

Goods and Services Tax (GST) is an indirect tax levied on the sale of goods and services, and it is an important source of government revenue.

Question 5. Revenue from external sources may include

1. Income tax from individuals and corporations.
2. Sales tax on goods and services.
3. Foreign aid and grants from other countries.
4. Dividends from state-owned enterprises.

Answer: 3. Foreign aid and grants from other countries.

Explanation:

Revenue from external sources includes income received from foreign aid and grants provided by other countries to support specific projects or development initiatives.

Question 6. Which of the following is a direct tax?

1. Goods and Services Tax (GST)
2. Corporate Tax
3. Excise Duty
4. Customs Duty

Answer: 2. Corporate Tax

Explanation:

Direct taxes are taxes that are directly levied on individuals and entities. Corporate tax is a type of direct tax that is imposed on the income of corporations or companies.

Question 7. Which of the following is an indirect tax?

1. Income Tax
2. Wealth Tax
3. Sales Tax
4. Property Tax

Answer: 3. Sales Tax

Explanation:

Indirect taxes are taxes that are imposed on goods and services, and the burden of these taxes is passed on to the consumers. Sales tax is an example of an indirect tax.

Question 8. Which of the following sources of revenue is considered non-tax revenue?

1. Income Tax
2. Customs Duty
3. Dividends from state-owned enterprises
4. Goods and Services Tax (GST)

Answer: 3. Dividends from state-owned enterprises

Explanation:

Non-tax revenue refers to the revenue earned by the government from sources other than taxes. Dividends received from state-owned enterprises are considered non-tax revenue.

Question 9. Which of the following taxes is levied on the value added at each stage of production or distribution?

1. Income Tax
2. Goods and Services Tax (GST)
3. Excise Duty
4. Property Tax

Answer: 2. Goods and Services Tax (GST)

Explanation:

Goods and Services Tax (GST) is a value-added tax that is levied on the value added at each stage of production or distribution of goods and services.

Question 10. Which of the following is an example of an external source of revenue for the government?

1. Income Tax
2. Corporate Tax
3. Foreign Aid
4. Sales Tax

Answer: 2. Foreign Aid

Explanation:

Foreign aid refers to financial assistance provided to a country by other countries or international organizations. It is an example of an external source of revenue for the government.

Question 11. Which of the following is an example of a direct source of government revenue?

1. Corporate income tax
2. Inflation tax
3. Sales tax
4. Property tax

Answer: 1. Corporate income tax

Question 12. What type of revenue is generated from government-owned assets or businesses?

1. Indirect taxes
2. Grants
3. User fees
4. Non-tax revenue

Answer: 4. Non-tax revenue

Question 13. Which tax is typically levied on the value of goods and services at each stage of production and distribution?

1. Income tax
2. Excise tax
3. Value Added Tax (VAT)
4. Property tax

Answer: 3. Value Added Tax (VAT)

Question 14. What is the main source of revenue for the government in a country with a predominantly agricultural economy?

1. Corporate income tax
2. Personal income tax
3. Export duties
4. Sales tax

Answer: 3. Export duties

Question 15. Which revenue source involves funds provided by foreign governments or international organizations to support specific projects or programs?

1. Corporate tax
2. Grants
3. Excise tax
4. Tariffs

Answer: 2. Grants

 Public Expenditure Management

Question 1. What is the main objective of public expenditure management?

1. To increase government revenue through taxation. ‘
2. To maximize government spending on welfare programs.
3. To ensure efficient allocation of resources for public goods and services.
4. To reduce government involvement in the economy.

Answer: 3. To ensure efficient allocation of resources for public goods and services.

Explanation:

The main objective of public expenditure management is to ensure, that government resources are allocated efficiently to provide public goods and services that benefit society.

Question 2. Which of the following is an example of capital expenditure?

1. Payment of salaries to government employees.
2. Investment in building new schools and hospitals.
3. Subsidies are provided to low-income families.
4. Interest payments on public debt.

Answer: 3. Investment in building new schools and hospitals.

Explanation:

Capital expenditure refers to investments in long-term assets like infrastructure, such as building new schools and hospitals.

Question 3. What is the difference between revenue expenditure and capital expenditure?

1. Revenue expenditure relates to investments in long-term assets, while capital expenditure includes day-to-day expenses.
2. Revenue expenditure includes day-to-day expenses, while capital expenditure relates to interest payments on public debt.
3. Revenue expenditure is funded through borrowing, while capital expenditure is funded through taxes.
4. Revenue expenditure is incurred on regular operations, while capital expenditure is incurred on long-term assets. ,

Answer: 4. Revenue expenditure is incurred on regular operations, while capital expenditure is incurred on long-term assets.

Explanation:

Revenue expenditure includes day-to-day expenses required for the ‘ normal functioning of the government, while capital expenditure involves investments in long-term assets.

Question 4. Which of the following is an example of transfer payments?

1. Investment in infrastructure development.
2. Payment of salaries to government employees.
3. Subsidies provided to farmers.
4. Interest payments on public debt.

Answer: 3. Subsidies provided to farmers.

Explanation:

Transfer payments refer to payments made by the government to individuals or other levels of government without any corresponding goods or services being received in return. Subsidies provided to farmers are an example of transfer payments.

Question 5. Why is effective public expenditure management important for the government?

1. To reduce government revenue through taxation.
2. To increase government control over the economy.
3. To ensure that public funds are used efficiently and effectively.
4. To minimize government spending on welfare programs.

Answer: 3. To ensure that public funds are used efficiently and effectively.

Explanation:

Effective public expenditure management is important to ensure that public funds are used efficiently and effectively to achieve the government’s policy objectives and provide essential services to the public.

Question 6. What is public expenditure management?

1. The process of managing private sector spending in the economy
2. The process of allocating and controlling government spending
3. The process of managing public debt and borrowing
4. The process of managing foreign aid and grants,

Answer: 2. The process of allocating and controlling government spending

Explanation:

Public expenditure management refers to the process of planning, allocating, and controlling government spending to achieve various economic and social objectives.

Question 7. Which of the following is not a primary objective of public expenditure management? 

1. Promoting economic growth and development
2. Ensuring price stability in the economy
3. Reducing income inequality and poverty
4. Maximizing government revenue through taxation

Answer: 4. Maximizing government revenue through taxation

Explanation:

While maximizing government revenue is an important aspect of public finance, it is not the primary objective of public expenditure management. The primary focus is on how the government allocates and controls its spending.

Question 8. Fiscal policy is closely related to public expenditure management because

1. Fiscal policy determines the level of government spending
2. Public expenditure management is a part of fiscal policy
3. Both involve controlling the money supply in the economy
4. Fiscal policy focuses on regulating private-sector spending only

Answer: 4. Fiscal policy determines the level of government spending

Explanation: 

Fiscal policy refers to the use of government spending and taxation to influence the economy. Public expenditure management is an integral part of fiscal policy, as it involves deciding how much the government spends on various programs and projects.

Question 9. What is the role of budgeting in public expenditure management?

1. Budgeting helps the government increase taxes for revenue generation
2. Budgeting ensures that government spending aligns with its policy priorities
3. Budgeting allows the government to control private-sector investments
4. Budgeting helps the government manage international trade relations

Answer: 2. Budgeting ensures that government spending aligns with its policy priorities

Explanation:

Budgeting is a crucial component of public expenditure management as it helps the government allocate funds to various sectors and programs based on its policy priorities and objectives.

Question 10. One of the challenges in public expenditure management is

1. The inability of the government to borrow from international financial institutions
2. The difficulty in increasing government spending to stimulate economic growth
3. The lack of transparency and accountability in budget execution
4. The lack of demand for public goods and services in the economy

Answer: 3. The lack of transparency and accountability in budget execution

Explanation:

Transparency and accountability in budget execution are essential for ensuring that public funds are used efficiently and effectively. Lack of transparency can lead to mismanagement and corruption.

Question 11. What is the role of the legislature in public expenditure management?

1. The legislature sets monetary policy to control government spending
2. The legislature approves the national budget and oversees government spending
3. The legislature controls the prices of public goods and services v
4. The legislature regulates international trade and tariffs

Answer: 2. The legislature approves the national budget and oversees government spending

Explanation:

The legislature plays a critical role in public expenditure management by approving the national budget and monitoring government spending to ensure that it aligns with the approved budget.

Question 12. In public expenditure management, “virement” refers to

1. The process of raising government revenue through taxes
2. The process of reallocating funds between different budget items
3. The process of managing foreign aid and grants
4. The process of controlling inflation through monetary policy

Answer: 2. The process of reallocating funds between different budget items

Explanation:

Virement in public expenditure management refers to the authority granted to government agencies to reallocate funds from one budget – item to another within the approved budget, usually without seeking legislative approval. ’

Question 13. What is the purpose of conducting performance evaluations in public expenditure management?

1. To increase government spending on all sectors equally
2. To determine the effectiveness and efficiency of government programs
3. To limit public spending to only essential goods and services
4. To ensure that all public expenditure is focused on defense and security

Answer: 2. To determine the effectiveness and efficiency of government programs

Explanation:

Performance evaluations in public expenditure management help assess the impact and efficiency of government programs and ensure that resources are allocated to programs that deliver the best results. It enables the government to make informed decisions on budget allocations.

Question 14. What is the primary goal of public expenditure management?

1. Maximizing government revenue
2. Minimizing budget deficit
3. Efficient allocation of resources
4. Reducing inflation

Answer: 3. Efficient allocation of resources

Question 15. Which aspect of public expenditure management involves setting clear objectives and priorities for government spending?

1. Budget forecasting
2. Budget execution
3. Budget formulation
4. Budget evaluation

Answer: 3. Budget formulation

Question 16. What does the term “Retirement” mean in public expenditure management?

1. The transfer of funds from one budget head to another
2. The allocation of funds for a specific project
3. The evaluation of budget performance
4. The approval of the final budget by the parliament

Answer: 1. The transfer of funds from one budget head to another

Question 17. Which mechanism is used in public expenditure management to control spending when actual revenues are lower than expected?

1. Debt management
2. Budget deficit
3. Austerity measures
4. Inflation targeting

Answer: 3. Austerity measures

Question 18. What is the purpose of conducting mid-year budget reviews in public expenditure management?

1. To evaluate the performance of government agencies
2. To identify potential cost-saving measures
3. To assess the impact of inflation on the budget
4. To adjust the budget based on changing economic conditions

Answer: 4. To adjust the budget based on changing economic conditions

Public Debt Management

Question 1. What is a budget?

1. A financial statement showing the revenue and expenses of a company
2. The total income of an individual or household
3. A plan that outlines expected income and expenses over a specific period
4. The total assets and liabilities of a government

Answer: 3. A plan that outlines expected income and expenses over a specific period

Explanation:

A budget is a financial plan that outlines expected income and expenses for a specific period, usually a year. It helps individuals, households, businesses, and governments to manage their finances effectively.

Question 2. Which of the following budgets is used by businesses to plan and control day-to-day operations?

1. Operating budget
2. Cash Budget
3. Capital budget
4. Flexible budget

Answer: 1. Operating budget

Explanation:

An operating budget is used by businesses to plan and control day-to-day operations, including revenue and expenses related to regular business activities.

Question 3. A cash budget is essential for managing

1. Long-term investments and capital projects
2. Short-term cash flow and liquidity
3. Marketing and advertising expenses
4. Employee salaries and benefits

Answer: 2. Short-term cash flow and liquidity

Explanation:

A cash budget is used to manage short-term cash flow and liquidity, helping organizations ensure they have enough cash on hand to meet their financial obligations.

Question 4. Which type of budget is most suitable for capital-intensive projects like building infrastructure?

1. Operating budget
2. Cash Budget
3. Capital budget
4. Flexible budget

Answer: 3. Capital budget

Explanation:

A capital budget is used to plan and control long-term investments and capital projects, such as building infrastructure, purchasing major equipment, or expanding facilities.

Question 5. A flexible budget is useful for

1. Controlling day-to-day expenses in a business
2. Allocating funds for specific capital projects
3. Adapting to changes in sales or production levels
4. Forecasting long-term revenue and expenses

Answer: 3. Adapting to changes in sales or production levels Explanation:

A flexible budget allows for adjustments in revenue and expenses based on changes in sales or production levels, providing a more accurate financial plan in dynamic business environments.

Question 6. What is a master budget?

1. A budget prepared by individuals for personal financial planning
2. The total budget of a government for all its departments and agencies
3. The comprehensive budget that includes all individual budgets of a company
4. A budget prepared by businesses for short-term cash management

Answer: 3. The comprehensive budget that includes all individual budgets of a company

Explanation:

A master budget is a comprehensive budget that includes all individual budgets of a company, such as the operating budget, capital budget, cash budget, and others. It represents the overall financial plan for the organization.

Question 7. Zero-based budgeting requires

1. Using the previous year’s budget as a starting point for the new budget
2. Justifying every budgeted expense as if starting from scratch
3. Increasing the budget by a fixed percentage every year
4. Allocating funds based on the popularity of different programs

Answer: 2. Justifying every budgeted expense as if starting from scratch

Explanation:

Zero-based budgeting requires justifying every budgeted expense as if starting from scratch, without considering the previous year’s budget. This approach helps identify and prioritize essential expenses.

Question 8. Incremental budgeting involves

1. Reducing the budget by a fixed percentage every year
2. Increasing the budget by a fixed percentage every year
3. Allocating funds based on the popularity of different programs
4. Using the previous year’s budget as a starting point for the new budget

Answer: 4. Using the previous year’s budget as a starting point for the new budget

Explanation:

Incremental budgeting involves using the previous year’s budget as a starting point for the new budget and then making adjustments or incremental changes based on new priorities or requirements.

Question 9. What is public debt?

1. The total debt owed by individuals to the government
2. The total debt owed by the government to individuals and foreign entities
3. The debt owed by corporations to the government
4. The debt owed by the government to the central bank

Answer: 2. The total debt owed by the government to individuals and foreign entities

Question 10. Which of the following is a common instrument used by governments to borrow money from the public?

1. Corporate bonds
2. Treasury bills
3. Stocks
4. Mortgage-backed securities

Answer: 2. Treasury bills

Question 11. How does a government use bond issuance as a debt management strategy?

1. To increase inflation
2. To raise funds for specific public projects
3. To reduce interest rates
4. To decrease the money supply

Answer: 2. To raise funds for specific public projects

Question 12. What is the role of a debt-to-GDP ratio in public debt management?

1. It determines the interest rate on government bonds.
2. It indicates the total amount of government revenue generated from debt.
3. It assesses the government’s ability to repay its debt relative to its economic output,
4. It determines the maturity period of government debt instruments.

Answer: 3. It assesses the government’s ability to repay its debt relative to its economic output,

Question 13. How does a government utilize debt restructuring as a debt management measure?

1. To reduce the national debt to zero
2. To extend the repayment period of existing debt
3. To borrow from international organizations
4. To increase interest rates on outstanding debt

Answer: 2.  To extend the repayment period of existing debt

Capital Receipts

Question 1. Capital receipts refer to

1. Money received from selling goods and services
2. Revenue earned from taxes and fines
3. Funds raised through long-term borrowing or the sale of assets
4. Money received from grants and subsidies

Answer: 3. Funds raised through long-term borrowing or the sale of assets

Explanation:

Capital receipts represent funds raised by the government or an organization through long-term borrowing (example, , Issuing bonds) or the sale of assets (e.g., selling property or stocks).

Question 2. Which of the following is an example of a capital receipt for a government?

1. Income tax collected from individuals
2. Revenue generated from selling government services
3. Proceeds from selling government-owned land
4. Grants received from other countries

Answer: 3. Proceeds from selling government-owned land

Explanation:

Proceeds from selling government-owned land are considered a capital receipt because they represent funds obtained through the sale of a capital asset. .

Question 3. Non-debt capital receipts include

1. Borrowings and loans from financial institutions
2. Revenue generated from taxes and fines
3. Grants received from other countries
4. Interest received on government loans

Answer: 3. Grants received from other countries Explanation:

Non-debt capital receipts consist of grants and aid received from other countries or international organizations, which do not create a debt obligation for the receiving country.

Question 4. Why are capital receipts essential for a government’s financial planning?

1. They help the government generate revenue from taxes
2. They enable the government to finance day-to-day expenses
3. They provide funds for development projects and infrastructure
4. They ensure the government’s financial stability during economic downturns

Answer: 3. They provide funds for development projects and infrastructure

Explanation:

Capital receipts provide funds that are crucial for financing long-term development projects, building infrastructure, and making capital investments.

Question 5. Which of the following represents a debt capital receipt for a government?

1. Revenue earned from government services
2. Proceeds from the sale of government assets
3. Borrowing from the central bank
4. Grants received from international organizations

Answer: 3. Borrowing from the central bank

Explanation:

Borrowing from the central bank or financial institutions creates a debt obligation for the government, making it a debt capital receipt.

Question 6. How are capital receipts different from revenue receipts?

1. Capital receipts are used to finance day-to-day expenses, while revenue receipts are used for long-term projects.
2. Capital receipts represent funds raised through long-term borrowing or asset sales, while revenue receipts represent funds from regular income sources like taxes and fines.
3. Capital receipts are non-tax revenue, while revenue receipts are tax revenue.
4. Capital receipts are received from foreign countries, while revenue receipts are domestic receipts.

Answer: 2. Capital receipts represent funds raised through long-term borrowing or asset sales, while revenue receipts represent funds from regular income sources like taxes and fines.

Explanation:

Capital receipts are funds raised through long-term borrowing or the sale of assets, while revenue receipts represent funds from regular income sources like taxes, fines, and fees.

Question 7. Government bonds and securities issued to the public represent

1. Capital expenditure
2. Capital receipts
3. Revenue expenditure
4. Revenue receipts

Answer: 2. Capital receipts

Explanation:

Government bonds and securities issued to the public are capital receipts as they represent funds raised through long-term borrowing.

Question 8. How do capital receipts impact the fiscal deficit of a government?

1. Capital receipts decrease the fiscal deficit
2. Capital receipts have no impact on the fiscal deficit
3. Capital receipts increase the fiscal deficit
4. Capital receipts eliminate the fiscal deficit

Answer: 1. Capital receipts decrease the fiscal deficit

Explanation:

Capital receipts, especially non-debt capital receipts, can help reduce the fiscal deficit by providing additional funds to the government without increasing the debt burden.

Revenue Receipts

Question 1. Revenue receipts refer to

1. Funds raised through long-term borrowing or the sale of assets
2. Money received from selling goods and services
3. Revenue earned from taxes, fines, and other regular income sources
4. Grants and aid received from other countries

Answer: 3. Revenue earned from taxes, fines, and other regular income sources

Explanation:

Revenue receipts represent funds generated by a government or organization from regular income sources, such as taxes, fines, fees, and other non-borrowed or non-capital sources.

Question 2. Which of the following is an example of a revenue receipt for a government?

1. Proceeds from selling government-owned land
2. Borrowings from financial institutions
3. Income tax collected from individuals and businesses
4. Grants received from international organizations.

Answer: 3. Income tax collected from individuals and businesses

Explanation:

Income tax collected from individuals and businesses is considered a revenue receipt for the government as it is a regular source of income for funding government operations.

Question 3. Non-tax revenue receipts include

1. Income tax collected from individuals and businesses
2. Borrowings from financial institutions
3. Grants received from other countries
4. Revenue generated from government services and fines

Answer: 4. Revenue generated from government services and fines

Explanation:

Non-tax revenue receipts consist of funds generated from government services, fines, fees, and other non-tax sources of income.

Question 4. Why are revenue receipts essential for a government’s financial planning?

1. They provide funds for development projects and infrastructure
2. They enable the government to finance long-term borrowing
3. They ensure the government’s financial stability during economic downturns
4. They help the government generate revenue from asset sales

Answer: 1. They provide funds for development projects and infrastructure

Explanation:

Revenue receipts are crucial for funding day-to-day government operations and financing various development projects, public services, and infrastructure.

Question 5. Which of the following represents a non-debt revenue receipt for a government?

1. Proceeds from the sale of government assets
2. Borrowing from the central bank
3. Grants received from international organizations
4. Revenue earned from government services

Answer: 4. Revenue earned from government services

Explanation:

Revenue earned from government sen/ices is a non-debt revenue receipt as it represents regular income from providing services to the public.

Question 6. How are revenue receipts different from capital receipts?

1. Revenue receipts are funds raised through long-term borrowing, while capital receipts represent regular income sources.
2. Revenue receipts represent funds raised through long-term borrowing or asset sales, while capital receipts represent funds from regular income sources like taxes and fines.
3. Revenue receipts are used to finance day-to-day expenses, while capital receipts are used for long-term projects.
4. Revenue receipts are non-tax revenue, while capital receipts are tax revenue.

Answer: 3. Revenue receipts are used to finance day-to-day expenses, while capital receipts are used for long-term projects.

Explanation:

Revenue receipts are used to finance day-to-day expenses and regular government operations, while capital receipts are used for long-term investments, capital projects, or asset acquisition.

Question 7. Government revenue earned from import duties and taxes on goods and services represents

1. Revenue expenditure
2. Revenue receipts
3. Capital expenditure
4. Capital receipts

Answer: 2. Revenue receipts

Explanation:

Government revenue earned from import duties and taxes on goods and services represents revenue receipts as it is a regular source of income for the government.

Question 8. How do revenue receipts impact the fiscal deficit of a government?

1. Revenue receipts decrease the fiscal deficit
2. Revenue receipts have no impact on the fiscal deficit
3. Revenue receipts increase the fiscal deficit
4. Revenue receipts eliminate the fiscal deficit

Answer: 3. Revenue receipts increase the fiscal deficit

Explanation:

Revenue receipts, when insufficient to cover government expenditures, can contribute to a fiscal deficit. The fiscal deficit occurs when the government spends more than it earns in revenue receipts.

Revenue Expenditure

Question 1. Revenue expenditure refers to

1. Funds spent on long-term investments and capital projects
2. Money spent on acquiring assets and properties
3. Expenditure incurred on day-to-day government operations and services
4. Expenditure on repaying long-term loans and debts

Answer: 3. Expenditure incurred on day-to-day government operations and services.

Explanation:

Revenue expenditure includes all regular and recurring expenses incurred by the government on day-to-day operations, such as salaries, wages, maintenance, supplies, and services.

Question 2. Which of the following is an example of revenue expenditure for a government?

1. Purchase of land for a new government office building
2. Payment of interest on a government loan
3. Construction of a new highway infrastructure
4. Investment in a state-owned enterprise.

Answer: 2. Payment of interest on a government loan

Explanation:

The payment of interest on a government loan is an example of revenue expenditure, as it represents a regular and recurring expense related to servicing the government’s debt.

Question 3. Revenue expenditure can be classified into

1. Capital and non-capital expenditure
2. Debt and equity expenditure
3. Foreign and domestic expenditure
4. Social and defense expenditure

Answer: 1. Capital and non-capital expenditure

Explanation: 

Revenue expenditure can be classified into capital expenditure, which relates to expenses on acquiring assets or investments, and non-capital expenditure, which pertains to regular day-to-day expenses.

Question 4. Why is revenue expenditure important for a government’s financial planning?

1. It provides funds for long-term investments and development projects.
2. It helps the government repay long-term loans and debts
3. It ensures the efficient delivery of public services and day-to-day operations
4. It enables the government to increase tax revenue

Answer: 3. It ensures efficient delivery of public services and day-to-day operations

Explanation:

Revenue expenditure is essential for the efficient delivery of public services and the smooth functioning of day-to-day government operations, ensuring that essential services are adequately funded.

Question 5. Which of the following represents a non-capital revenue expenditure for a government?

1. Investment in building a new government office
2. Purchase of vehicles for government officials
3. Payment of salaries to government employees
4. Investment in a state-owned enterprise

Answer: 3. Payment of salaries to government employees

Explanation:

The payment of salaries to government employees is a non-capital revenue expenditure as it represents a regular and recurring expense for government operations.

Question 6. How are revenue expenditure and capital expenditure different?

1. Revenue expenditure is incurred on day-to-day operations, while capital expenditure is incurred on long-term investments and projects. ,
2. Revenue expenditure is funded through long-term borrowing, while capital expenditure is funded through regular income sources.
3. Revenue expenditure is related to asset acquisition, while capital expenditure is related to regular expenses.
4. Revenue expenditure is non-tax revenue, while capital expenditure is tax revenue.

Answer: 1. Revenue expenditure is incurred on day-to-day operations, while capital expenditure is incurred on long-term investments and projects.

Explanation:

Revenue expenditure is incurred on regular day-to-day operations and services, while capital expenditure is incurred on long-term investments, capital projects, and asset acquisition.

Question 7. Government spending on social welfare programs and public education represents:

1. Capital expenditure
2. Capital receipts
3. Revenue expenditure
4. Revenue receipts

Answer: 3. Revenue expenditure

Explanation:

Government spending on social welfare programs and public education is revenue expenditure as it represents regular expenses incurred on providing essential public services.

Question 8. How does revenue expenditure impact the fiscal deficit of a government?

1. Revenue expenditure decreases the fiscal deficit
2. Revenue expenditure has no impact on the fiscal deficit
3. Revenue expenditure increases the fiscal deficit
4. Revenue expenditure eliminates the fiscal deficit

Answer: 3. Revenue expenditure increases the fiscal deficit

Explanation: 

Revenue expenditure, when higher than revenue receipts, can contribute to a fiscal deficit. The fiscal deficit occurs when the government spends more than it earns in revenue receipts.

Capital Expenditure

Question 1. Capital expenditure refers to

1. Money spent on day-to-day government operations and services
2. Expenditure incurred on long-term investments and capital projects
3. Funds received from the sale of government assets
4. Expenditure on repaying long-term loans and debts

Answer: 2. Expenditure incurred on long-term investments and capital projects

Explanation:

Capital expenditure represents funds spent on long-term investments, such as acquiring assets, infrastructure development, and capital projects.

Question 2. Which of the following is an example of capital expenditure for a government?

1. Payment of salaries to government employees
2. Construction of a new government office building
3. Purchase of office supplies and equipment
4. Investment in a state-owned enterprise,

Answer: 2. Construction of a new government office building

Explanation:

The construction of a new government office building is an example of capital expenditure as it involves a long-term investment in acquiring an asset (the building).

Question 3. Capital expenditure can be classified into

1. Capital and non-capital expenditure
2. Debt and equity expenditure
3. Foreign and domestic expenditure
4. Social and defense expenditure

Answer: 1. Capital and non-capital expenditure Explanation:

Capital expenditure can be classified into capital expenditure, which relates to long-term investments and capital projects, and non-capital expenditure, which pertains to regular day-to-day expenses.

Question 4. Why is capital expenditure important for a government’s financial planning?

1. It provides funds for long-term investments and development projects
2. It helps the government repay long-term loans and debts
3. It ensures the efficient delivery of public services and day-to-day operations
4. It enables the government to increase tax revenue

Answer: 1. It provides funds for long-term investments and development projects Explanation:

Capital expenditure is crucial for financing long-term investments, development projects, and infrastructure, which are essential for the economic growth and development of a country.

Question 5. Which of the following represents a non-capital expenditure for a government?

1. Investment in building a new government office
2. Purchase of vehicles for government officials
3. Payment of salaries to government employees
4. Investment in a state-owned enterprise

Answer: 3. Payment of salaries to government employees

Explanation:

The payment of salaries to government employees is a. non-capital expenditure as it represents a regular and recurring expense for government operations.

Question 6. How are capital expenditure and revenue expenditure different?

1. Capital expenditure is incurred on long-term investments and projects, while revenue expenditure is incurred on day-to-day operations.
2. Capital expenditure is funded through long-term borrowing, while revenue expenditure is funded through regular income sources.
3. Capital expenditure is related to asset acquisition, while revenue expenditure is related to regular expenses.
4. Capital expenditure is non-tax revenue, while revenue expenditure is tax revenue.

Answer: 1. Capital expenditure is incurred on long-term investments and projects, while revenue expenditure is incurred on day-to-day operations.

Explanation:

Capital expenditure is incurred on long-term investments, capital projects, and asset acquisition, while revenue expenditure is incurred on regular day-to-day operations and services.

Question 7. Government spending on defense and military equipment represents

1. Capital expenditure
2. Capital receipts
3. Revenue expenditure
4. Revenue receipts

Answer: 1. Capital expenditure

Explanation:

Government spending on defense and military equipment is capital expenditure as it involves long-term investments in acquiring assets (e.g., military equipment and infrastructure).

Question 8. How does capital expenditure impact the fiscal deficit of a government?

1. Capital expenditure decreases the fiscal deficit
2. Capital expenditure has no impact on the fiscal deficit
3. Capital expenditure increases the fiscal deficit
4. Capital expenditure eliminates the fiscal deficit

Answer: 3. Capital expenditure increases the fiscal deficit

Explanation:

Capital expenditure, when higher than capital receipts and revenue receipts, can contribute to a fiscal deficit. The fiscal deficit occurs when the government spends more than it earns in revenue and capital receipts.

Budgetary Deficit Or Overall Deficit

Question 1. What is the budgetary deficit?

1. The difference between total revenue and total expenditure of the government
2. The difference between capital receipts and capital expenditure of the government
3. The difference between revenue receipts and revenue expenditure of the government
4. The difference between government savings and investments

Answer: 3. The difference between revenue receipts and revenue expenditure of the government ‘

Explanation:

Budgetary deficit refers to the difference between total revenue receipts and total revenue expenditure of the government in a fiscal year.

Question 2. A budgetary deficit occurs when

1. Total revenue is greater than total expenditure
2. Capital receipts are greater than capital expenditure
3. Total revenue is less than total expenditure
4. Capital receipts are less than capital expenditure

Answer: 3. Total revenue is less than total expenditure

Explanation:

A budgetary deficit occurs when total revenue (both revenue receipts and capital receipts) is less than total expenditure (both revenue expenditure and capital expenditure).

Question 3. Which of the following is a measure of the overall deficit of a country?

1. Fiscal deficit.
2. Budgetary deficit
3. Current account deficit
4. Trade deficit

Answer: 3. Current account deficit

Explanation:

The current account deficit represents the difference between a country’s total imports of goods, services, and transfers and its total exports of goods, services, and transfers.

Question 4. Budgetary deficit is also known as

1. Revenue deficit
2. Trade deficit
3. Fiscal deficit
4. Capital deficit

Answer: 1. Revenue deficit

Explanation:

A budgetary deficit is also referred to as a revenue deficit, which is the difference between revenue receipts and revenue expenditure of the government.

Question 5. Fiscal deficit includes

1. Only revenue deficit
2. Only capital deficit
3. Both revenue deficit and capital deficit
4. Neither revenue deficit nor capital deficit

Answer: 3. Both revenue deficit and capital deficit

Explanation:

Fiscal deficit includes both revenue deficit (the difference between revenue receipts and revenue expenditure) and capital deficit (the difference between capital receipts and capital expenditure).

Question 6. How does a budgetary deficit impact the overall financial health of a government?

1. A budgetary deficit indicates financial stability and fiscal responsibility
2. A budgetary deficit leads to an increase in government savings
3. A budgetary deficit indicates that the government is spending more than its revenue
4. A budgetary deficit has no impact on the overall financial health of a government

Answer: 3. A budgetary deficit indicates that the government is spending more than its revenue

Explanation:

A budgetary deficit indicates that the government’s total spending exceeds its total revenue, which may lead to borrowing or accumulating debt to cover the shortfall.

Question 7. The formula to calculate budgetary deficit is

1. Budgetary Deficit = Total Revenue – Total Expenditure
2. Budgetary Deficit = Revenue Receipts – Revenue Expenditure
3. Budgetary Deficit = Capital Receipts – Capital Expenditure
4. Budgetary Deficit = Fiscal Receipts – Fiscal Expenditure

Answer: 2. Budgetary Deficit = Revenue Receipts – Revenue Expenditure

Explanation:

Budgetary deficit is calculated as the difference between revenue receipts and revenue expenditure of the government.

Question 8. If a government has a budgetary surplus, it means

1. Total revenue is less than total expenditure
2. Total revenue is equal to total expenditure
3. Total revenue is greater than total expenditure
4. Total revenue is negative

Answer: 3. Total revenue is greater than total expenditure

Explanation:

A budgetary surplus occurs when the government’s total revenue (both revenue receipts and capital receipts) is greater than its total expenditure (both revenue expenditure and capital expenditure).

Revenue Deficit

Question 1. What is a revenue deficit?

1. The difference between total revenue and total expenditure of the government
2. The difference between capital receipts and capital expenditure of the government
3. The difference between revenue receipts and revenue expenditure of the government
4. The difference between government savings and investments

Answer: 3. The difference between revenue receipts and revenue expenditure of the government

Explanation:

Revenue deficit refers to the difference between total revenue receipts and total revenue expenditure of the government in a fiscal year.

Question 2. A revenue deficit occurs when

1. Total revenue is greater than total expenditure
2. Capital receipts are greater than capital expenditure
3. Total revenue is less than total expenditure
4. Capital receipts are less than capital expenditure

Answer: 3. Total revenue is less than total expenditure

Explanation:

A revenue deficit occurs when total revenue (both revenue receipts and capital receipts) is less than total revenue expenditure.

Question 3. The revenue deficit implies that the government’s regular income (revenue) is insufficient to meet its

1. Long-term investments
2. Short-term loans
3. Day-to-day expenses
4. Foreign debt obligations

Answer: 3. Day-to-day expenses

Explanation:

The revenue deficit indicates that the government’s regular income (revenue) is insufficient to cover its day-to-day expenses and regular operational costs. . .

Question 4. How is a revenue deficit different from a fiscal deficit?

1. A revenue deficit considers only revenue receipts and expenditures, while a fiscal deficit considers both revenue and capital receipts and expenditures.
2. The revenue deficit is calculated annually, while the fiscal deficit is calculated monthly.
3. A revenue deficit is the same as a fiscal deficit.
4. A revenue deficit is a type of fiscal deficit.

Answer: 1. Revenue deficit considers only revenue receipts and expenditure, while fiscal deficit considers both revenue and capital receipts and expenditure.

Explanation:

Revenue deficit focuses on the difference between revenue receipts and revenue expenditure, whereas fiscal deficit considers the difference between both revenue and capital receipts and total expenditure

Question 5. How does a revenue deficit impact a government’s borrowing?

1. A revenue deficit reduces the need for government borrowing.
2. A revenue deficit may lead to increased government borrowing to finance expenses.
3. A revenue deficit has no impact on government borrowing.
4. A revenue deficit eliminates the need for government borrowing.

Answer: 3. A revenue deficit may lead to increased government borrowing to finance expenses

Explanation:

A revenue deficit may necessitate increased borrowing by the government to cover the shortfall between revenue receipts and revenue expenditure.

Question 6. The formula to calculate revenue deficit is

1. Revenue Deficit = Total Revenue – Total Expenditure
2. Revenue Deficit = Revenue Receipts – Revenue Expenditure
3. Revenue Deficit = Capital Receipts – Capital Expenditure
4. Revenue Deficit = Fiscal Receipts – Fiscal Expenditure

Answer: 2. Revenue Deficit = Revenue Receipts – Revenue Expenditure

Explanation:

Revenue deficit is calculated as the difference between revenue receipts and revenue expenditure of the government. i

Question 7. If a government has a revenue surplus, it means

1. Total revenue is less than total expenditure
2. Total revenue is equal to total expenditure
3. Total revenue is greater than total expenditure
4. Total revenue is negative

Answer: 3. Total revenue is greater than total expenditure

Explanation:

A revenue surplus occurs when the government’s total revenue (both revenue receipts and capital receipts) is greater than its total revenue expenditure.

Question 8. The revenue deficit primarily arises due to

1. Capital investments in infrastructure projects
2. Repayment of long-term loans and debts
3. Day-to-day operational expenses and subsidies
4. Foreign aid and grants received

Answer: 3. Day-to-day operational expenses and-subsidies

Explanation:

The revenue deficit mainly arises due to the government’s day-to-day operational expenses and subsidies that exceed its regular revenue receipts.

Fiscal Deficit

Question 1. What is fiscal deficit?

1. The difference between total revenue and total expenditure of the government
2. The difference between capital receipts and capital expenditure of the government
3. The difference between revenue receipts and revenue expenditure of the government
4. The difference between government savings and investments

Answer: 1. The difference between total revenue and total expenditure of the government

Explanation:

Fiscal deficit refers to the difference between the total revenue (both revenue receipts and capital receipts) and total expenditure (both j revenue expenditure and capital expenditure) of the government in a^ fiscal year

Question 2. A fiscal deficit occurs when

1. Total revenue is greater than total expenditure
2. Capital receipts are greater than capital expenditure
3. Total revenue is less than total expenditure
4. Capital receipts are less than capital expenditure

Answer: 1. Total revenue is less than total expenditure

Explanation:

A fiscal deficit occurs when the total revenue (both revenue receipts and capital receipts) is less than the total expenditure (both revenue expenditure and capital expenditure) of the government.

Question 3. The fiscal deficit implies that the government is spending more than its

1. Long-term investments
2. Short-term loans
3. Day-to-day expenses
4. Foreign debt obligations

Answer: 3. Day-to-day expenses Explanation:

The fiscal deficit indicates that the government’s total expenditure (including day-to-day expenses) exceeds its total revenue.

Question 4. How is a fiscal deficit different from a revenue deficit?

1. A fiscal deficit considers only revenue receipts and expenditures, while a revenue deficit considers both revenue and capital receipts and expenditures.
2. The fiscal deficit is calculated annually, while the revenue deficit is calculated monthly.
3. A fiscal deficit is the same as a revenue deficit.
4. A fiscal deficit is a type of revenue deficit.

Answer: 1. Fiscal deficit considers only revenue receipts and expenditure, while revenue deficit considers both revenue and capital receipts and expenditure.

Explanation:

Fiscal deficit focuses on the difference between total revenue (both revenue receipts and capital receipts) and total expenditure (both revenue expenditure and capital expenditure), whereas revenue deficit considers the difference only between revenue receipts and revenue expenditure.

Question 5. How does fiscal deficit impact a government’s borrowing?

1. A fiscal deficit reduces the need for government borrowing
2. A fiscal deficit may lead to increased government borrowing to finance expenses.
3. A fiscal deficit has no impact on government borrowing.
4. A fiscal deficit eliminates the need for government borrowing.

Answer: 2. A fiscal deficit may lead to increased government borrowing to finance expenses.

Explanation:

A fiscal deficit may necessitate increased borrowing by the government to cover the shortfall between total revenue and total expenditure.

Question 6. The formula to calculate fiscal deficit is

1. Fiscal Deficit = Total Revenue – Total Expenditure
2. Fiscal Deficit = Revenue Receipts * Revenue Expenditure
3. Fiscal Deficit = Capital Receipts – Capital Expenditure
4. Fiscal Deficit = Revenue Receipts – Capital Receipts – Revenue Expenditure – Capital Expenditure

Answer: 1. Fiscal Deficit = Total Revenue – Total Expenditure

Explanation:

Fiscal deficit is calculated as the difference between total revenue (both revenue receipts and capital receipts) and total expenditure (both revenue expenditure and capital expenditure) of the government.

Question 7. If a government has a fiscal surplus, it means

1. Total revenue is less than total expenditure
2. Total revenue is equal to total expenditure
3. Total revenue is greater than total expenditure
4. Total revenue is negative

Answer: 3. Total revenue is greater than total expenditure

Explanation:

A fiscal surplus occurs when the government’s total revenue (both revenue receipts and capital receipts) is greater than its total expenditure (both revenue expenditure and capital expenditure).

Question 8. The fiscal deficit primarily arises due to

1. Capital investments in infrastructure projects
2. Repayment of long-term loans and debts
3. Day-to-day operational expenses and subsidies
4. Foreign aid and grants received

Answer: 3. Day-to-day operational expenses and subsidies Explanation: ,

The fiscal deficit mainly arises due to the government’s day-to-day operational expenses and subsidies that exceed its total revenue.

Primary Deficit

Question 1. What is the primary deficit?

1. The difference between total revenue and total expenditure of the government
2. The difference between capital receipts and capital expenditure of the government
3. The difference between revenue receipts and revenue expenditure of the government
4. The difference between total revenue and total expenditure excluding interest payments on debt

Answer: 4. The difference between total revenue and total expenditure excluding interest payments on debt

Explanation:

The primary deficit refers to the difference between total revenue and total expenditure of the government excluding interest payments on debt. It indicates the extent to which the government relies on borrowings to finance its expenses, excluding the interest burden.

Question 2. The primary deficit takes into account which of the following items?

1. Capital receipts and capital expenditure
2. Revenue receipts and revenue expenditure
3. Total revenue and total expenditure
4. Interest payments on debt and government savings

Answer: 2. Revenue receipts and revenue expenditure

Explanation:

The primary deficit considers revenue receipts (both regular and capital receipts) and revenue expenditure (both regular and capital expenditure) while excluding interest payments on debt.

Question 3. How is the primary deficit different from the fiscal deficit?

1. The primary deficit considers total revenue and total expenditure, while the fiscal deficit considers only revenue receipts and revenue expenditure.
2. The primary deficit considers both revenue and capital receipts and expenditure, while the fiscal deficit considers only revenue receipts and revenue expenditure.
3. The primary deficit is the same as the fiscal deficit.
4. The primary deficit is a type of fiscal deficit.

Answer: 1. The primary deficit considers both revenue and capital receipts and expenditure, while the fiscal deficit considers only revenue receipts and revenue expenditure.

Explanation:

The primary deficit includes both revenue and capital receipts and expenditures but excludes interest payments on debt, whereas the fiscal deficit considers both revenue and capital receipts and expenditures, including interest payments on debt.

Question 4. Which of the following is true regarding the primary deficit?

1. A primary deficit can only occur when total revenue is less than total expenditure.
2. A primary deficit occurs when total revenue is greater than total expenditure.
3. A primary deficit is unrelated to the government’s borrowing.
4. A primary deficit is always equal to the fiscal deficit.

Answer: 1. A primary deficit can only occur when total revenue is less than total expenditure.

Explanation:

A primary deficit occurs when total revenue (both revenue receipts and capital receipts) is less than total expenditure (both revenue expenditure and capital expenditure), excluding interest payments on debt.

Question 5. The formula to calculate the primary deficit is

1. Primary Deficit = Total Revenue – Total Expenditure
2. Primary Deficit = Revenue Receipts – Revenue Expenditure
3. Primary Deficit = Capital Receipts – Capital Expenditure
4. Primary Deficit = Fiscal Deficit – Interest Payments on Debt

Answer: 4. Primary Deficit = Fiscal Deficit – Interest Payments on Debt

Explanation:

The primary deficit is calculated as the difference between the fiscal deficit and interest payments on debt. Mathematically, Primary Deficit = Fiscal Deficit – Interest Payments on Debt.

Question 6. What does a primary deficit imply about a government’s finances?

1. The government is managing its expenses efficiently without reliance on borrowings.
2. The government is spending more than its total revenue, including interest payments on debt.
3. The government is generating enough revenue to cover all its expenses, including interest payments on debt.
4. The government is not engaged in any borrowing activities.

Answer: 2. The government is spending more than its total revenue, including interest payments on debt.

Explanation:

A primary deficit indicates that the government is spending more than its total revenue, including interest payments on debt. It highlights the extent to which the government is reliant on borrowings to finance its expenses.

Question 7. If a government has a primary surplus, it means: 

1. Total revenue is less than total expenditure-
2. Total revenue is equal to total expenditure „
3. Total revenue is greater than total expenditure, including interest payments on debt
4. Total revenue is negative

Answer: 3. Total revenue is greater than total expenditure, including interest payments on debt.

Explanation:

A primary surplus occurs when the government’s total revenue (both revenue receipts and capital receipts) is greater than its total expenditure (both revenue expenditure and capital expenditure), including interest payments on debt.

Question 8. The primary deficit is considered a more appropriate measure of a government’s fiscal health because it focuses on

1. Long-term investments and capital projects
2. Day-to-day operational expenses and subsidies
3. Interest payments on debt.
4. Both revenue and capital receipts and expenditure

Answer: 2. Day-to-day operational expenses and subsidies

Explanation:

The primary deficit is considered a more appropriate measure of a government’s fiscal health because it focuses on the government’s day-to-day operational expenses and subsidies, excluding the impact of interest payments on debt.

Finance Bill

Question 1. What is the Finance Bill?

1. A bill introduced in the parliament to allocate funds for various government projects
2. A bill introduced by the Ministry of Finance to propose new tax laws and make amendments to existing ones
3. A bill introduced to regulate the financial sector and banking activities
4. A bill introduced to control government expenditure and reduce fiscal deficit

Answer: 2. A bill introduced by the Ministry of Finance to propose new tax laws and make amendments to existing ones

Explanation:

The Finance Bill is a bill presented by the Ministry of Finance in the parliament that includes proposals related to new taxes, amendments to existing tax laws, and other financial matters.

Question 2. The Finance Bill is presented every year during the presentation of

1. The Economic Survey
2. The Union Budget
3. The Annual Financial Statement
4. The Fiscal Policy Statement

Answer: 2. The Union Budget

Explanation:

The Finance Bill is presented in the parliament every year as part of the Union Budget, which contains the government’s revenue and expenditure plans for the upcoming financial year.

Question 3. Which of the following is NOT included in the Finance Bill? 

1. Proposals related to direct and indirect taxes
2. Amendments to the rates of existing taxes
3. Allocation of funds for various government projects and schemes
4. Measures to promote economic growth and development

Answer: 3. Allocation of funds for various government projects and schemes

Explanation:

The Finance Bill focuses on tax proposals, amendments to existing tax laws, and related financial matters. The allocation of funds for government projects and schemes is part of the Annual Financial Statement presented along with the Finance Bill.

Question 4. The Finance Bill becomes an Act after it is

1. Approved by the President of the country.
2. Passed by the Lok Sabha and Rajya Sabha and receives the President’s assent
3. Approved by the Ministry of Finance
4. Passed by the State Assemblies and receives the Governor’s approval

Answer: 4. Passed by the Lok Sabha and Rajya Sabha and receives the President’s assent

Explanation:

The Finance Bill becomes an Act after it is passed by both houses of parliament (Lok Sabha and Rajya Sabha and receives the assent of the President of India.

Question 5. The provisions of the Finance Bill come into effect from

1. The date of its presentation in the parliament
2. The beginning of the next financial year.
3. The date of approval by the Lok Sabha
4. The date of approval by the Rajya Sabha

Answer: 2. The beginning of the next financial year

Explanation:

The provisions of the Finance Bill generally come into effect from the beginning of the next financial year, i.e., from April 1 of the following year after its presentation in the parliament.

Question 6. Who introduces the Finance Bill in the parliament?

1. The Prime Minister of the country
2. The Finance Minister of the country
3. The President of the country
4. The Chief Justice of the Supreme Court

Answer: 2. The Finance Minister of the country

Explanation:

The Finance Bill is introduced in the parliament by the Finance Minister of the country.

Question 7. The Finance Bill is primarily concerned with which aspect of governance?

1. Defense and security matters
2. Social welfare and education programs
3. Economic and financial matters
4. Environmental protection and conservation

Answer: 3. Economic and financial matters

Explanation:

The Finance Bill is primarily concerned with economic and financial matters, particularly related to taxes, fiscal policies, and financial regulations.

Question 8. The Finance Bill is discussed and debated in which house of parliament?

1. The Lok Sabha
2. The Rajya Sabha
3. Both the Lok Sabha and Rajya Sabha
4. The State Assemblies

Answer: 3. Both the Lok Sabha and Rajya Sabha

Explanation:

The Finance Bill is discussed and debated in both houses of parliament, i.e., the Lok Sabha and Rajya Sabha before it is passed and becomes an Act.

Outcome Budget

Question 1. What is the Outcome Budget?

1. A budget prepared by the Ministry of Finance to allocate funds for various government projects
2. A budget presented in the parliament that includes proposals related to new taxes and financial matters
3. A budget that focuses on the outcomes and results achieved by various government schemes and programs.
4. A budget that outlines the government’s revenue and expenditure plans for the upcoming financial year

Answer: 3. A budget that focuses on the outcomes and results achieved by various government schemes and programs

Explanation:

The Outcome Budget is a budget document that focuses on presenting the outcomes and results achieved by various government schemes and programs, rather than just the allocation of funds.

Question 2. The Outcome Budget is presented every year by

1. The Ministry of Finance
2. The Planning Commission
3. The Ministry of Statistics and Program Implementation
4. The Prime Minister of India

Answer: 3. The Ministry of Statistics and Program Implementation Explanation:

The Outcome Budget is presented every year by the Ministry of Statistics and Program Implementation (MOSPI) in India.

Question 3. The Outcome Budget assesses the performance of government schemes based on

1. The total budget allocated to each scheme
2. The number of government employees involved in the implementation of each scheme
3. The outcomes and outputs achieved by each scheme
4. The popularity of each scheme among the public

Answer: 3. The outcomes and outputs achieved by each scheme

Explanation:

The Outcome Budget assesses the performance of government schemes based on the actual outcomes and outputs achieved by each scheme, rather than just the budget allocation or number of employees involved.

Question 4. The primary focus of the Outcome Budget is to

1. Evaluate the financial health of the government
2. Monitor the implementation progress of various government schemes
3. Ensure compliance with fiscal responsibility and budget management rules
4. Assess the impact and effectiveness of government policies and programs

Answer: 4. Assess the impact and effectiveness of government policies and programs

Explanation:

The primary focus of the Outcome Budget is to assess the impact and effectiveness of government policies and programs in achieving their intended outcomes and objectives.

Question 5. The Outcome Budget is aimed at promoting:

1. Fiscal discipline and reducing government expenditure
2. Transparency and accountability in government spending
3. Short-term goals and objectives of the government
4. Public-private partnerships for effective governance

Answer: 2. Transparency and accountability in government spending

Explanation:

The Outcome Budget promotes transparency and accountability in government spending by providing a detailed assessment of the outcomes and results achieved by various government schemes.

Question 6. How does the Outcome Budget differ from the Regular Budget?

1. The Regular Budget focuses on outcomes and results, while the Outcome Budget focuses on budget allocation.
2. The Regular Budget includes new tax proposals, while the Outcome Budget includes fiscal deficit figures.
3. The Regular Budget presents the government’s revenue and expenditure plans, while the Outcome Budget assesses the impact of government schemes.
4. The Regular Budget is presented by the Prime Minister, while the Outcome Budget is presented by the Finance Minister.

Answer: 3. The Regular Budget presents the government’s revenue and expenditure plans, while the Outcome Budget assesses the impact of government schemes.

Explanation:

The Regular Budget primarily focuses on presenting the government’s revenue and expenditure plans for the upcoming financial year, whereas the Outcome Budget assesses the impact and effectiveness of various government schemes and programs.

Question 7. The Outcome Budget helps in identifying

1. The number of government employees in each department
2. Areas of duplication in government schemes
3. The popularity of government schemes among the public
4. The total funds allocated to each government department

Answer: 2. Areas of duplication in government schemes

Explanation:

The Outcome Budget helps in identifying areas of duplication in government schemes and programs and provides insights to streamline resources and improve the effectiveness of schemes.

Question 8. The Outcome Budget is presented along with which other budget document?

1. The Regular Budget
2. The Performance Budget
3. The Zero-based Budget
4. The Supplementary Budget

Answer: 2. The Performance Budget

Explanation:

The Outcome Budget is presented along with the Performance Budget, which focuses on presenting the performance and achievements of various government schemes and programs.

Guillotine

Question 1. What is the Guillotine in the context of the parliamentary budget process?

1. A device used for capital punishment in some countries
2. A method to close debates and allocate time for discussions during the budget session
3. A parliamentary committee responsible for reviewing the budget proposals
4. A tool used by the finance minister to present the budget in the parliament

Answer: 2. A method to close debates and allocate time for discussions during the budget session

Explanation:

In the context of the parliamentary budget process, the Guillotine is a method used to close debates and allocate time for discussions on various budget proposals and bills during the budget session. It helps ensure that all the essential budgetary discussions are completed within the scheduled time.

Question 2. When is the Guillotine typically used in the parliament?

1. During discussions on non-financial bills
2. To extend the budget session beyond its scheduled time
3. To end discussions on budget proposals and related bills
4. To allow unlimited time for debates on budget matters

Answer: 3. To end discussions on budget proposals and related bills

Explanation:

The Guillotine is typically used in the parliament to end discussions on budget proposals, votes on demands for grants, and other financial bills within the scheduled time. It ensures that all essential budgetary matters are considered and passed before the conclusion of the budget session.

Question 3. How does the Guillotine help in the efficient passage of the budget?

1. It allows for unlimited time for debates on each budget proposal.
2. It ensures that all non-financial bills are discussed thoroughly.
3. It allows the finance minister to present the budget efficiently.
4. It sets a deadline for discussions, thereby streamlining the process.

Answer: 3. It sets a deadline for discussions, thereby streamlining the process.

Explanation:

The Guillotine sets a deadline for discussions on budget proposals and financial bills, which helps streamline the process and ensures that the budget is passed within the scheduled time. It prevents unnecessary delays and keeps the discussions focused on essential budgetary matters.

Question 4. Who decides the allocation of time for discussions using the Guillotine?

1. The Speaker of the Lok Sabha
2. The Prime Minister
3. The Finance Minister
4. The President of India.

Answer: 1. The Speaker of the Lok Sabha

Explanation:

The allocation of time for discussions and the application of the Guillotine during the budget session are typically decided by the Speaker of the Lok Sabha (in the lower house of the parliament).

Question 5. What happens when the Guillotine is applied during the budget session?

1. All budget proposals are automatically approved without any discussions.
2. Remaining discussions on budget proposals are cut short, and votes are taken collectively.
3. The budget session is extended to allow for more time for discussions.
4. The finance minister presents the budget to the President for approval

Answer: 2. Remaining discussions on budget proposals are cut short, and votes are taken collectively.

Explanation:

When the Guillotine is applied, the remaining discussions on budget proposals are cut short, and votes on demands for grants and other financial matters are taken collectively to ensure the efficient passage of the budget within the scheduled time.

Question 6. Which house of parliament uses the Guillotine during the budget session?

1. Lok Sabha
2. Rajya Sabha
3. Both Lok Sabha and Rajya Sabha
4. State Legislative Assemblies

Answer: 4. Both Lok Sabha and Rajya Sabha

Explanation:

The Guillotine can be applied in both houses of parliament, i.e., Lok Sabha (the lower house) and Rajya Sabha (the upper house), during the budget session to facilitate the efficient passage of the budget and related bills.

Question 7. How does the Guillotine impact the participation of members in budget discussions?

1. It encourages active participation and thorough discussions on each proposal.
2. It limits the participation of members and curtails the time for discussions.
3. It allows members to extend the budget session for more detailed debates.
4. It has no impact on the participation of members in budget discussions.

Answer: 2. It limits the participation of members and curtails the time for discussions.

Explanation:

The Guillotine limits the time for discussions and curtails the participation of members in budget discussions to ensure that all essential matters are completed within the scheduled time. It may lead to less time for detailed debates on each proposal.

Cut Motions

Question 1. What are Cut Motions in the context of parliamentary procedures?

1. Motions to cut short the duration of parliamentary sessions
2. Motions to reduce the salaries of government officials
3. Motions to reduce the amount of demand for grants presented in the budget
4. Motions to cut off funding for a specific government project

Answer: 3. Motions to reduce the amount of demand for grants presented in the budget

Explanation:

Cut Motions are motions moved by Members of Parliament (MPs) to reduce the amount of demand for grants presented in the budget. They allow MPs to express their disapproval of a particular policy or expenditure proposed by the government.

Question 2. When are Cut Motions moved in the parliament?

1. During discussions on non-financial bills
2. Before the presentation of the budget
3. During discussions on financial matters and demands for grants
4. After the passage of the budget

Answer: 3. During discussions on financial matters and demands for grants

Explanation:

Cut Motions are moved during discussions on financial matters, including demands for grants, when the budget is being considered in the parliament.

Question 3. What is the purpose of a Cut Motion?

1. To propose a reduction in the total budget allocation
2. To criticize the functioning of the opposition parties
3. To express disapproval of a specific policy or expenditure
4. To delay the passage of the budget

Answer: 3. To express disapproval of a specific policy or expenditure

Explanation:

The primary purpose of a Cut Motion is to express disapproval of a specific policy or expenditure proposed by the government. It allows MPs to put forth their objections to the allocation of funds for a particular purpose.

Question 4. Which of the following statements is true about Cut Motions?

1. Cut Motions are moved after the budget is passed.
2. Cut Motions can only be moved by the ruling party MPs.
3. Cut Motions are meant to propose an increase in budget allocations.
4. Cut Motions can be moved by any MP to seek a reduction in budget allocations.

Answer: 4. Cut Motions can be moved by any MP to seek a reduction in budget allocations.

Explanation:

Cut Motions can be moved by any MP, irrespective of their party affiliation, to seek a reduction in budget allocations for specific demands for grants.

Question 5. How many types of Cut Motions are typically allowed in the parliament?

1. One type
2. Two types
3. Three types
4. Four types

Answer: 3. Three types

Explanation:

There are typically three types of Cut Motions allowed in the parliament

1. Policy Cut
2. Economy Cut, and
3. Token Cut.

Question 6. Which type of Cut Motion aims at reducing the amount of a demand for a grant to Re. 1?

1. Policy Cut
2. Economy Cut
3. Token Cut
4. Fiscal Cut

Answer: 3. Token Cut

Explanation:

A Token Cut aims at reducing the amount of a demand for a grant to Re. 1, symbolically indicating the MP’s disapproval of the entire amount.

Question 7. What is the consequence if a Cut Motion is accepted by the Speaker of the House?

1. The demand for grants is withdrawn from the budget.
2. The budget is rejected and needs to be presented again.
3. The amount of the demand for grants is reduced as proposed in the motion.
4. The budget is passed without any changes.

Answer: 4. The amount of the demand for grants is reduced as proposed in the motion.

Explanation:

If a Cut Motion is accepted by the Speaker of the House, the amount of the demand for a grant is reduced as proposed in the motion. The government is then required to adjust its budget accordingly.

Question 8. What is the purpose of allowing Cut Motions in the parliament?

1. To delay the passage of the budget and stall government activities
2. To allow MPs to express their grievances and concerns
3. To increase the power of the opposition parties
4. To provide additional time for parliamentary debates

Answer: 2. To allow MPs to express their grievances and concerns

Explanation:

The purpose of allowing Cut Motions in the parliament is to allow MPs to express their grievances and concerns about specific policies or expenditures proposed in the budget. It allows for a healthy and constructive debate on budgetary matters.

Consolidated Fund Of India

Question 9. What is the Consolidated Fund of India?

1. A fund managed by the Reserve Bank of India for foreign exchange transactions
2. A fund maintained by the government to finance development projects
3. A fund that holds all revenues received and loans raised by the government
4. A fund created to support the defense and security expenses of the country

Answer: 3. A fund that holds all revenues received and loans raised by the government.

Explanation:

The Consolidated Fund of India is a fund that holds all revenues received by the government of India from taxes, non-tax sources, and loans raised by the government.

Question 10. Which article of the Indian Constitution deals with the Consolidated Fund of India? 

1. Article 110
2. Article 280
3. Article 266
4. Article 360

Answer: 3. Article 266

Explanation:

Article 266 of the Indian Constitution deals with the Consolidated Fund of India.

Question 11. All government revenues and receipts are credited to which fund?

1. Public Account
2. Contingency Fund
3. Consolidated Fund of Indian
4. Development Fund

Answer: 3. Consolidated Fund of India

Explanation:

All government revenues, including taxes and non-tax revenues, and receipts from loans raised are credited to the Consolidated Fund of India.

Question 12. The expenditures charged by the Consolidated Fund of India include

1. Expenditure on foreign aid and grants
2. Expenditure on salaries and allowances of the President and – Governors
3. Expenditure on defense and security
4. Expenditure on welfare and social programs

Answer: 2. Expenditure on salaries and allowances of the President and Governors

Explanation:

The expenditure charged on the Consolidated Fund of India includes expenditure on salaries and allowances of the President and Governors of states.

Question 13. How is the money from the Consolidated Fund of India withdrawn?

1. By the President’s order
2. By the Governor’s order
3. By the Finance Minister’s order.
4. Only through parliamentary approval

Answer: 4. Only through parliamentary approval

Explanation:

Money from the Consolidated Fund of India can be withdrawn only through parliamentary approval by passing the appropriation bills.

Question 14. Which fund is audited by the Comptroller and Auditor General (CAG) of India?

1. Public Account
2. Contingency Fund
3. Consolidated Fund of India
4. Development Fund

Answer: 3. Consolidated Fund of India

Explanation:

The Consolidated Fund of India is audited by the Comptroller and Auditor General (CAG) of India to ensure proper utilization of funds

Question 15. If there is a need for additional funds during an emergency, from which fund can the government draw money?

1. Public Account
2. Contingency Fund
3. Consolidated Fund of India
4. Development Fund

Answer: 2. Contingency Fund

Explanation:

In case of an urgent and unforeseen need for funds, the government can draw money from the Contingency Fund of India. This fund is created to meet urgent and unforeseen expenses.

Question 16. Which of the following statements about the Consolidated Fund of India is correct?

1. The President has complete control over the withdrawals from this fund. .
2. All government revenues are credited to this fund, but no expenditure is charged to it.
3. The fund is maintained by the Reserve Bank of India.
4. The fund is utilized for all government expenditures, except the expenditure charged on the Contingency Fund.

Answer: 4. The fund is utilized for all government expenditures, except the expenditure charged on the Contingency Fund.

Explanation:

The Consolidated Fund of India is utilized for all government expenditures, except for the expenditure that is charged to the Contingency Fund of India and the Public Account.

Contingency Fund Of India

Question 1. What is the Contingency Fund of India?

1. A fund managed by the Reserve Bank of India for foreign exchange transactions
2. A fund maintained by the government to finance development projects
3. A fund that holds all revenues received and loans raised by the government
4. A fund created to meet urgent and unforeseen expenditures of the government

Answer: 4. A fund created to meet urgent and unforeseen expenditures of the government

Explanation:

The Contingency Fund of India is a fund created to meet urgent and unforeseen expenditures of the government, pending authorization from the parliament. ,

Question 2. Which article of the Indian Constitution deals with the Contingency Fund of India? 

1. Article 110
2. Article 267
3. Article 360
4. Article 280

Answer: 2. Article 267

Explanation:

Article 267 of the Indian Constitution deals with the Contingency Fund of India.

Question 3. How is the Contingency Fund of India financed?

1. By the President from personal funds
2. Voluntary contributions from the public
3. By budgetary allocations from the Consolidated Fund of India
4. External borrowings from international agencies

Answer: 3. By budgetary allocations from the Consolidated Fund of India

Explanation:

The Contingency Fund of India is financed by budgetary allocations made by the parliament from the Consolidated Fund of India.

Question 4. What is the maximum amount that can be kept in the Contingency Fund of India?

1.  10,000 crore
2.  30,000 crore
3.  50,000 crore
4. There is no specified maximum limit.

Answer: 4. There is no specified maximum limit.

Explanation:

There is no specified maximum limit for the Contingency Fund of India. The amount that can be kept in the fund is determined by the government as per the requirement.

Question 5. Who has the authority to make withdrawals from the Contingency Fund of India? 

1. The President of India
2. The Prime Minister of India
3. The Finance Minister of India.
4. The Reserve Bank of India

Answer: 1. The President of India

Explanation:

The President of India has the authority to make withdrawals from the Contingency Fund of India for urgent and unforeseen expenses.

Question 6. How are withdrawals from the Contingency Fund of India made?

1. By the President’s order
2. By the Prime Minister’s order
3. By the Finance Minister’s order
4. With the Reserve Bank of India’s approval

Answer: 1. By the President’s order

Explanation:

Withdrawals from the Contingency Fund of India are made by the order of the President of India.

Question 7. What happens if the amount in the Contingency Fund of India is insufficient to meet the expenditure?

1. The government can draw additional funds from the Consolidated Fund of India.
2. The government can borrow from international financial institutions.
3. The expenditure remains pending until the parliament approves additional funds.
4. The President can use personal funds to cover the shortfall.

Answer: 1. The government can draw additional funds from the Consolidated Fund of India.

Explanation:

If the amount in the Contingency Fund of India is insufficient to meet the expenditure, the government can draw additional funds from the Consolidated Fund of India after obtaining the necessary authorization from the parliament.

Question 8. The Contingency Fund of India is audited by

1. The President of India
2. The Comptroller and Auditor General (CAG) of India
3. The Finance Minister of India
4. The Reserve Bank of India

Answer: 2. The Comptroller and Auditor General (CAG) of India

Explanation:

The Contingency Fund of India is audited by the Comptroller and Auditor General (CAG) of India to ensure proper utilization of funds.

Public Account

Question 1. What is the Public Account of India?

1. A fund managed by, the Reserve Bank of India for foreign exchange transactions
2. A fund maintained by the government to finance development projects
3. A fund that holds all revenues received and loans raised by the government
4. A fund that accounts for money received by the government other than those classified under the Consolidated Fund of India

Answer: 4. A fund that accounts for money received by the government other than those classified under the Consolidated Fund of India

Explanation:

The Public Account of India is a fund that accounts for money received by the government other than those classified under the Consolidated Fund of India. It includes receipts of the government that do not belong to the government as a whole and are kept in the Public Account for specific purposes.

Question 2. Which article of the Indian Constitution deals with the Public Account of India?

1. Article 266
2. Article 110
3. Article 360
4. Article 280

Answer: 1. Article 266

Explanation:

Article 266 of the Indian Constitution deals with the Public Account of India.

Question 3. Which of the following receipts is credited to the Public Account of India?

1. Revenue from income tax
2. Revenue from customs duty
3. Proceeds from disinvestment of public sector enterprises
4. Proceeds from loans raised by the government

Answer: 3. Proceeds from disinvestment of public sector enterprises

Explanation:

The proceeds from disinvestment of public sector enterprises are credited to the Public Account of India, as these receipts do not form part of the government’s current revenue.

Question 4. How are withdrawals from the Public Account of India made?

1. By the President’s order
2. By the Prime Minister’s order
3. By the Finance Minister’s order
4. Only through parliamentary approval

Answer: By the President’s order Explanation:

Withdrawals from the Public Account of India are made by the order of the President of India for specified purposes.

Question 5. Which of the following is NOT a part of the Public Account of India?

1. Provident Fund
2. Small Savings Funds
3. Investment in public sector companies
4. National Investment Fund

Answer: 3. Investment in public sector companies

Explanation:

The investment in public sector companies is not a part of the Public Account of India. Public sector companies are separate entities, and their investments are treated differently.

Question 6. The Public Account of India is administered by

1. The President of India
2. The Reserve Bank of India
3. The Finance Minister of India
4. The Comptroller and Auditor General (CAG) of India

Answer: 3. The Finance Minister of India

Explanation:

The Public Account of India is administered by the Finance Minister of India.

Question 7. What is the primary purpose of the Public Account of India?

1. By the President’s order
2. By the Prime Minister’s order
3. By the Finance Minister’s order
4. Only through parliamentary approval

Answer: 1. By the President’s order

Explanation:

Withdrawals from the Public Account of India are made by the order of. the President of India for specified purposes.

Question 8. Which of the following is NOT a part of the Public Account of India?

1. Provident Fund
2. Small Savings Funds
3. Investment in public sector companies
4. National Investment Fund

Answer: 3. Investment in public sector companies

Explanation:

The investment in public sector companies is not a part of the Public Account of India. Public sector companies are separate entities, and their investments are treated differently.

Question 9. The Public Account of India is administered by

1. The President of India
2. The Reserve Bank of India
3. The Finance Minister of India
4. The Comptroller and Auditor General (CAG) of India

Answer: 3. The Finance Minister of India

Explanation:

The Public Account of India is administered by the Finance Minister of India.

Question 10. What is the primary purpose of the Public Account of India?

1. To finance government development projects
2. To hold revenues for the welfare of government employees
3. To account for receipts and disbursements of public money
4. To Provide funds for emergencies

Answer: 3. To account for receipts and disbursements of public money

The primary purpose of the Public Account of India is to account for receipts and disbursements of public money that does not belong to the government as a whole

Question 11. The surplus amount in the Public Account of India is usually utilized for

1. Financing the defense and security expenses of the country
2. Meeting the fiscal deficit of the government
3. Financing various welfare and social programs
4. Repayment of loans raised by the government

Answer:  1. Financing various welfare and social programs

Explanation:

The surplus amount in the Public Account of India is typically utilized for financing various welfare and social programs and other specified purposes, as approved by the government.