Practice test

Budget and taxation - Test Set 1

Review 20 exam-focused questions with detailed explanations, then start the interactive test when you are ready.

20 questions

Questions and explanations

  1. Question 1

    Which of these is one of the functions of the Government budget?
    1. Management of money supply
    2. Maintaining strict budgetary balance
    3. Redistribution of income and wealth
    4. Price fixation
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  2. Question 2

    Which of the following is NOT included in ‘Operating Surplus’?
    1. Rent
    2. Profit
    3. Interest
    4. Wages in cash
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  3. Question 3

    Identify the correct match.
    1. Pension to retired government employees - Revenue Receipt
    2. Purchase of Machinery in Railways - Capital Expenditure
    3. Both A and B
    4. Only B
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  4. Question 4

    When did the Government of India bring the gender sensitivities of the budgetary allocation in its statement for the first time?
    1. 2004-05
    2. 2006-07
    3. 2005-06
    4. 2008-09
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  5. Question 5

    Revenue expenditure minus revenue receipts is ______.
    1. Revenue deficit
    2. Budget deficit
    3. Always negative
    4. lways positive
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  6. Question 6

    In which union budget was India’s first sovereign wealth fund named ‘National Investment and Infrastructure Fund (NIIF)’ announced?
    1. 2015-16
    2. 2021-22
    3. 2017-18
    4. 2019-20
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  7. Question 7

    ______ expenditure and ______ receipts are shown by the government budget.
    1. Estimated; actual
    2. Actual; estimated
    3. Actual; actual
    4. Estimated; estimated
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  8. Question 8

    Which of the following is NOT an example of factor payment?
    1. Interest
    2. Wages
    3. Rent
    4. Pension
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  9. Question 9

    The collection of all bundles that the consumer can buy with her income at the prevailing market prices is called the ______.
    1. Budget set
    2. Budget constraint
    3. Budget anomaly
    4. Budget line
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  10. Question 10

    Gross primary deficit is the difference between ______.
    1. Revenue deficit and interest receipt
    2. Gross fiscal deficit and interest receipts
    3. Revenue deficit and interest payment
    4. Gross fiscal deficit and net interest liabilities
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  11. Question 11

    Which Indian budget introduced a statement highlighting the gender sensitivities of the budgetary allocations?
    1. 2008-09
    2. 2010-11
    3. 2005-06
    4. 2001-02
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  12. Question 12

    Which of the following functions of the government budget is associated with distribution of income?
    I. Allocation function
    II. Redistribution function
    1. Only I
    2. Neither I nor II
    3. Both I and II
    4. Only II
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  13. Question 13

    If assets of a bank are greater than liabilities, it will be recorded as:
    1. Assets
    2. Reserves
    3. Net worth
    4. Liabilities
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  14. Question 14

    Which of the following is an example of capital receipts?
    1. Revenue from the sale of government assets
    2. Grants-in-aid from other governments
    3. Interest on government bonds
    4. Taxes on income
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  15. Question 15

    In which of the following situations does the government run a deficit budget?
    1. When the government expenditure and revenue both are zero.
    2. When the government expenditure exceeds revenue.
    3. When the government expenditure equals revenue.
    4. When the government revenue exceeds expenditure.
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  16. Question 16

    Which of the following is the best indicator of the borrowings of the Government?
    1. Revenue deficit
    2. Primary deficit
    3. Balance of payments deficit
    4. Fiscal deficit
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  17. Question 17

    Which of the below mentioned elements is NOT a way to finance the government deficits?
    1. Borrowings from domestic and international sources
    2. Non-tax revenues
    3. Higher taxation
    4. Deficit financing
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  18. Question 18

    Read the following about Capital receipts:
    A) All those receipts of the government which create liability or reduce financial assets are termed as capital receipts.
    B) The main items of capital receipts are loans raised by the government from the public which are called market borrowings, borrowings by the government from the Reserve Bank and commercial banks and other financial institutions through the sale of treasury bills, loans received from foreign governments and international organizations and recoveries of loans granted by the central government.
    Identify the CORRECT statement / statements.
    1. Both A and B
    2. Only B
    3. Neither A nor B
    4. Only A
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  19. Question 19

    Read the following about Deficit reduction.
    A. Government deficit can be reduced by an increase in taxes or reduction in expenditure.
    B. In India, the government has been trying to increase tax revenue with greater reliance on direct taxes (indirect taxes are regressive in nature-they impact all income groups equally).
    Identify the CORRECT statement / statements.
    1. Only A
    2. Both A and B
    3. Only B
    4. Neither A nor B
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  20. Question 20

    Which type of expenditure refers to expenses that do not lead to the creation of physical or financial assets?
    1. Fiscal expenditure
    2. Development expenditure
    3. Capital Expenditure
    4. Revenue Expenditure
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