Practice test

Budget and taxation - Test Set 3

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 country first introduced zero-based budgeting?
    1. India
    2. Germany
    3. US
    4. UK
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  2. Question 2

    What is the main objective of zero-based budgeting?
    1. Establishing a relationship between inputs and outputs.
    2. Re-evaluation of all the activities every year when budget provisions are made.
    3. Examining the objectives for which funds are provided.
    4. To assess the effectiveness of each programme and activity with the output.
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  3. Question 3

    Which of the following is an example of capital receipt in the government budget?
    1. Sale of government bonds
    2. Income from government-owned enterprises
    3. Tax revenue collected from citizens
    4. Grants received from foreign countries
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  4. Question 4

    What is a budget deficit?
    1. The excess of government revenue over expenditure.
    2. The amount of money allocated for defence spending.
    3. The amount of money allocated for social welfare programmes.
    4. The excess of government expenditure over revenue.
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  5. Question 5

    Which of the following is an example of a non-debt capital receipt in the government budget?
    1. Sale of government-owned land
    2. Loans from international financial institutions.
    3. Interest payment on government bonds
    4. Tax revenue collected from citizens
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  6. Question 6

    What do you mean by balanced budget?
    1. Expenditure not equal to revenue
    2. Expenditure equal to revenue
    3. Expenditure more than revenue
    4. Expenditure is less than revenue
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  7. Question 7

    Which of the following is an objective of the Government Budget:
    a. GDP Growth
    b. Reallocation of Resources
    c. Balanced Regional Growth
    1. Only a
    2. All a, b and c
    3. Only a and c
    4. Only b
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  8. Question 8

    Which of the following items is NOT a part of the non-plan revenue expenditure of the government budget?
    1. Salaries and pensions
    2. Subsidies
    3. Defence services
    4. Central assistance for states and union territories
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  9. Question 9

    Identify the correct statement/s regarding budgetary deficit?
    i. Deficit acts as a flow that adds to the stock of the debt.
    ii. Deficit acts as stock, which is independent of debt.
    iii. Deficit acts as a burden on the future generation.
    1. Only ii
    2. Only i and ii
    3. Only i
    4. Only i and iii
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  10. Question 10

    CBIC stands for ______.
    1. Central Bureau of Investigation and Committee
    2. Central Board on Issues Related to Caste
    3. Central Board of Information and Communication
    4. Central Board of Indirect Taxes and Customs
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  11. Question 11

    What is the primary reason for a government to implement a Goods and Services Tax (GST)?
    1. To simplify the tax structure
    2. To discourage all kinds of consumption
    3. To increase the complexity of the tax system
    4. To eliminate all indirect taxes
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  12. Question 12

    What is the purpose of ‘customs duty’ in international trade?
    1. To encourage unlimited imports
    2. To protect domestic industries by taxing imports
    3. To standardise products internationally
    4. To regulate the export of goods
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  13. Question 13

    If a government wants to boost economic growth in a recession, which measure is it likely to take?
    1. Implement strict trade barriers
    2. Increase taxes significantly
    3. Reduce public spending
    4. Increase public spending
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  14. Question 14

    What is the full form of GST?
    1. Goods and Services Tax
    2. Goods and Sale Tax
    3. Gifts and Sale Tax
    4. Gifts and Services Tax
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  15. Question 15

    Taxes like gift tax, wealth tax etc are also referred to as which type of taxes?
    1. Paperless taxes
    2. Direct taxes
    3. Rich taxes
    4. Paper taxes
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  16. Question 16

    If tax rate decreases with increase in taxable base, then this type of taxation is called:
    1. Increasing
    2. Progressive
    3. Regressive
    4. Degressive
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  17. Question 17

    From the ___ budget, the practice of showing budget deficit has been discontinued in India.
    1. 1992-1997
    2. 1980-1982
    3. 1985-1990
    4. 1974-1979
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  18. Question 18

    In the context of a government budget, what does the term “fiscal deficit” represent?
    1. The surplus funds available for public spending.
    2. The total government debt.
    3. The portion of the budget allocated for defense spending.
    4. The difference between government revenue and government expenditure.
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  19. Question 19

    ____ is the difference between the government’s total expenditure and its total receipts excluding borrowing.
    1. Fiscal deficit
    2. Revenue Deficit
    3. Primary Deficit
    4. Revenue surplus
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  20. Question 20

    What does a budget deficit indicate?
    1. Government spending exceeds government revenue
    2. Government revenue exceeds government spending
    3. The government is saving for future projects
    4. The government is not allocating enough funds for public services
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