MCQs For NCERT Class 12 Economics Chapter 11 Government Budget and Economy

Please refer to the MCQ Questions for Class 12 Economics Chapter 11 Government Budget and Economy with Answers. The following Government Budget and Economy Class 12 Economics MCQ Questions have been designed based on the latest syllabus and examination pattern for Class 12. Our experts have designed MCQ Questions for Class 12 Economics with Answers for all chapters in your NCERT Class 12 Economics book.

Government Budget and Economy Class 12 MCQ Questions with Answers

See below Government Budget and Economy Class 12 Economics MCQ Questions, solve the questions and compare your answers with the solutions provided below.

Question: In the context of government budget, which of the following statements is correct ?
(a) Budget is a statement of expected annual receipts and expenditure is correct?
(b) It is a detail of actual receipts and expenditures of the government in a financial year
(c) It offers a detailed description of achievements of the government during the 5 year plans
(d) It indicates BoP status of the economy 

Question: Which of the following are the objectives of government budget ?
(a) Redistribution of income and wealth
(b) Economy stability
(c) Both (a) and (b)
(d) None of these 

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

Question: Regressive tax is that which is :
(a) Charged at an increasing rate when income of the individual increases
(b) Charged at a decreasing rate when income of the individual increases
(c) Relatively a low percentage of an individual’s income
(d) A fixed percentage of an individual’s income 

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

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

Question: Capital expenditure is that estimated expenditure of the government which?
(a) Assets are increased
(b) liability is decreased
(c) Both (a) and (b)
(d) Assets and liabilities do not change 

Question: Deficit budget refers to that situation in which government’s budget expenditure is :
(a) less than its budget receipts
(b) More than its budget receipts
(c) Equal to its budget receipts
(d) None of these 

Question: Fiscal deficit=
(a) Total expenditure – total receipt other than borrowing
(b) Revenue expenditure- revenue receipts
(c) Capital expenditure – capital receipts
(d) Revenue expenditure + Capital expenditure – revenue receipts

Question: Surplus budget is that budget where in :
(a) Estimated revenue of the government < estimated expenditure of the government
(b) Estimated revenue of the government > estimated expenditure of the government
(c) Estimated revenue of the government = estimated expenditure of the government
(d) None of these 

Question. A tax, the burden of which can be shifted to others, is called:
(a) Indirect tax
(b) direct tax
(c) wealth tax
(d) none of these

Question. If primary deficit is ₹ 6,900 and interest payment is ₹600, then fiscal deficit is:
(a)₹ 6,300
(b) ₹7,500
(c)₹27.400
(d) ₹7.300

Question. Tax is imposed on value added at the various stages of production is known as:
(a) Corporate profit tax
(b) direct personal tax
(c) value added tax
(d) none of these

Question. Progressive tax is a tax which is :
(a) Charged at a decreasing rate when income of the individual increases
(b) Charged at a increasing rate when income of the individual increases
(c) A fixed percentage of an individual income
(d) None of these

Question. Regressive tax is a tax which is :
(a) Charged at a increasing rate when income of the individual increases
(b) Charged at a decreasing rate when income of the individual increases
(c) Relatively a low percentage of an individual’s income
(d) None of these

Question. Which of the following is an indirect tax?
(a) Wealth tax
(b) Excise tax
(c) income tax
(d) none of these

Question. Which of the following is a direct tax?
(a) income tax
(b)Excise tax
(c) sales tax
(d) custom duty

Question. Capital expenditure is that estimated expenditure of the government by which:
(a) assets are increased
(b) liability is decreased
(c) both (a) and (b)
(d) assets and liabilities do not change

Question. Which of the following is a part of the revenue expenditure in the Indian Government budget
(a) Interest payments
(b) Defence purchases all of these
(c) Wage bill of the government
(d) all of these

Question. Capital receipt is that receipt of the government which:
(a) creates a liability
(b) reduces the assets
(c) both (a) and (b)
(d) neither la) nor (b)

Question. Which of the following are the objectives of government budget?
(a) Redistribution of income wealth
(b) Economic stability
(c) GDP growth
(d) all of these

Question. Surplus budget is that budget wherein:
(a) Estimated revenue of the government <Estimated expenditure of the government
(b) Estimated revenue of the government > Estimated expenditure of the government
(c) Estimated revenue of the government= Estimated expenditure of the government
(d) none of these

Question. Fiscal Deficit=
(a) Total expenditure – Total receipts other than borrowing
(b) Revenue expenditure – Revenue receipts
(c) Capital expenditure Capital receipts
(d) Revenue expenditure + Capital expenditure – Revenue receipts

Question. Deficit budget refers to that situation in which government’s budget expenditure is:
(a) less than its budget receipts
(b) more than its budget receipts
(c) equal to its budget receipts
(d) none of these

Question. Which of the following is/are implication/s of fiscal deficit?
(a) Erosion of government credibility
(b) Inflationary spiral
(c) national debts for future generation
(d) none of these

Question. In the context of government budget, which of the following statements is correct?
(a) Budget is a statement of expected annual receipts and expenditures of the government
(b) It is the detail of actual receipts and expenditures of the government in a financial year
(c) It offers a detailed description of achievements of the government during the five year plans
(d) It indicates BoP status of the domestic economy

Question. Which of the following is a non-tax receipt?
(a) Fees
(b) Fines
(c) gift tax
(d) grants and donations

Question. A budget is a balanced one when:
(a) Total expenditure = Total receipts
(b) Total expenditure< Total receipts
(c) Total expenditure > Total receipts
(d) none of these

Question. In which of the following ways, can deficit in budget be financed?
(a) Borrowing from RBI
(b) Borrowing from the public
(c) both (a) and (b)
(d) Neither (a) nor (b)

Question. The difference between fiscal deficit and interest payment is called:
(a) revenue deficit
(b) primary deficit
(c) budget deficit
(d) capital deficit

Question. Tax, the impact of which lies on the person on whom it is legally imposed, is known as:
(a) Indirect tax
(b) direct tax
(c) value added tax
(d) none of these

Question. Which of the following is a non-tax receipt?
(a) Gift tax
(b) sales tax
(c) donations
(d) Excise duty

Question. Taxes like wealth and gift tax in India which carry their significance in terms of revenue yield are called:
(a) Indirect tax
(b) direct tax
(c) value added tax
(d) paper taxes

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

Question. The primary deficit in a government budget is:-
(a) Fiscal deficit – Interest Payments
(b) Total Expenditure – Total Receipts
(c) Revenue deficit – Interest payments
(d) Revenue expenditure – Revenue Receipts

Question. Capital receipts include:
(a) Tax Revenue
(b) Non-tax Revenue
(c) Recovery of loans
(d) Borrowings

Question. Which of the following is the objective of the government budget?
(a) distribution of income and wealth
(b) Economic stability
(c) GDP growth
(d) All of these

Question. The primary deficit can be zero it _
(a) Fiscal Deficit < Interst Payments 
(b) Fiacal Deficit = Interest payments
(c) Fiscal Deficit > Interest Payments
(d) Revenue Deficit < Fiscal Deficit

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

Question. The tax that is imposed on value-added at the various stages of production is known as:
(a) Corporate profit tax
(b) value-added tax 
(c) Direct personal tax
(d) None of these

Question. Which one of the following is a combination of capital expenditure?
(a) Grants and interest payments
(b) Subsidies and construction of roads
(c) Construction of roads and repayment of loans
(d) Defence services expenditure and construction of school building

Question. __ is a key variable in judging the financial health of the public sector and the stability of the economy.
(a) Revenue deficit
(b) Fiscal deficit
(c) Primary deficit
(d) None of the above

Question. Primary deficit is equal to :
(a) Fiscal Deficit less interest payments
(b) Revenue deficit less borrowings
(c) Borrowings less interest payments
(d) Borrowings less fiscal deficit

Question. If interest payments are ₹100 crore and the primary deficit is ₹50 crore. What will be the value of borrowings?
(a) ₹50 crore
(b) ₹100 crore
(c) ₹200 crore
(d) ₹150 crore

Question. Which one of the following is the capital expenditure of the government?
(a) Payment of pension
(b) Payment of subsidies on production
(c) Purchasing of shares
(d) Grants

Question. Why gift tax is considered a paper tax?
(a) It is an indirect tax
(b) It yields very low revenue
(c) It is a direct tax
(d) Both b) and c)

Question. Assertion (A): Fiscal deficit indicates the total borrowing requirements of the government. 
Reason (R): Government mainly borrows from RBI to meet its fiscal deficit.
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is true but Reason (R) is False
(d) Assertion (A) is False but Reason (R) is true.

Question. Assertion (A): Fines and penalties are a source of non-tax revenue for the government. 
Reason (R): A fine of ₹ 500 was imposed on not wearing a mask. 
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is true but Reason (R) is False
(d) Assertion (A) is False but Reason (R) is true.

Question. Assertion (A): Public goods must be provided by the government.
Reason (R): Public goods are those goods or services that are collectively consumed. It is not possible to exclude anyone from enjoying their benefits and one person’s consumption does not reduce the availability to others.
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is true but Reason (R) is False
(d) Assertion (A) is False but Reason (R) is true.

Question. Assertion (A): Fiscal deficit shows a better position of the government expenditure in comparison to the budget deficit. 
Reason (R): Fiscal deficit means borrowings of the government.
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is true but Reason (R) is False
(d) Assertion (A) is False but Reason (R) is true.