Important MCQ Questions on CUET Economics Chapter-The government objective with Detailed explanation
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MCQ Questions for CUET Economics Chapter-The government objective Set-1
Macroeconomic Economics - MCQ on The Government: Functions and scope
Class XII
Q.1.What is a government budget?
I. Annual Statement of Government Income
II. Annual Statement about the export or Import
III. Annual Statement of Government consumption
IV. Annual statement of the estimated receipts and expenditure
Answer:
IV.Annual statement of the estimated receipts and expenditure
Explanation: The annual revenue and expenditure for a particular fiscal year is called Government Budget
Q.2.What is the safe level of fiscal deficit?
I. 10% of Gross Domestic Product
II. 5% of Net Domestic Product
III. 5% of Gross Domestic Product
IV. 10% of Net Domestic Product
Answer:
III.5% of Gross Domestic Product
Explanation: 5% of Gross Domestic Product is the safest level of Fiscal Deficit decided by the government.
Q.3.What are the objectives of Government Budget
I. Economic growth
II. Reduction of poverty and employment
III. Reallocation of Resources
IV. All of them
Answer:
IV.All of them
Explanation: The Government budget is prepared to reallocate resources, reduce poverty and employment and to grow economy
Q.4.Capital Receipts
I. Create assets or reduce liabilities
II. Create liabilities or reduce assets
III. Create Liabilities and receipts’
IV. None of the above
Answer:
II.Create liabilities or reduce assets
Explanation: Capital receipts are government receipts that increase liabilities or reduce assets
Q.5 When government receipts are more than the estimated government expenditure.
I. Surplus Budget
II. Deficit Budget
III. Overall Budget
IV. Normal Budget
Answer:
I.Surplus Budget
Explanation: A surplus budget is a budget in which estimated government receipts are more than the estimated government expenditure.
Q.6 Sales Tax comes under
I. Tax Revenue
II. Non Tax revenue
III. Both
IV. None
Answer:
I.Tax Revenue
Explanation: Tax revenue may be defined as receipts from all kinds of taxes
Q.7.Penalties comes under
I. Tax Revenue
II. Non Tax revenue
III. Both
IV. None
Answer:
II.Non tax revenue
Explanation: Penalty is imposed on an illegal act and it has nothing to do with tax so it comes under Non tax items
Q.8.What is deficit financing?
I. Borrowing government from the Reserve Bank
II. Borrowing of government from the Sebi
III. Borrowing of government from the Foreign Countries
IV. Borrowing of government from the Financial Institutions
Answer:
I.Borrowing government from the Reserve Bank
Explanation: Borrowing government from the Reserve Bank by creating new currency
Q.9.How fiscal deficit is calculated?
I. Total budget expenditure-Total budget receipts.
II. Total budget receipts -Total budget expenditure net of borrowings.
III. Total Budget Expectation – Actual Budget Result
IV. None
Answer:
I. Total budget expenditure-Total budget receipts net of borrowings.
Explanation: Fiscal deficit is defined as the excess of all expenditure over total receipts reduced by borrowings
Q.10.Escheat comes under
I. Expenditure
II. Tax Items
III. Gifts
IV. Non Tax Items
Answer:
IV.Non Tax Items
Explanation: Escheat means all the claims of the government on the property of a person who died without having any legal heirs or without leaving a will.
Q.11.What is primary deficit
I. Fiscal deficit minus interest payments.
II. fiscal deficit minus Fiscal Surplus
III. interest payments minus fiscal deficit
IV. Fiscal Surplus- Fiscal Deficit
Answer:
I.Fiscal deficit minus interest payments.
Explanation: Primary deficit means a position where total expenditure of the government excluding interest payments exceeds sum total of its revenue receipts and non-debt capital receipts. Primary deficit means the fiscal deficit minus interest payments.
Q.12.Revenue received by the government in the form of prices paid for government supplied commodities and services are called
I. Government Revenue
II. Private revenue
III. Commercial revenue
IV. Revenue deficit
Answer:
III.Commercial revenue
Explanation: Commercial revenue means revenue received by the government in the form of prices paid for government supplied commodities and services
Q.13.Recovry of Loans are:
I. Revenue receipts
II. Tax Receipt
III. None
IV. Capital receipts
Answer:
Capital receipts
Explanation: In capital receipts, the government is under obligation to return the amount along with interest Recovery of loan is one of the source of capital Receipt
Q.14.Government’s estimated revenue receipts and revenue expenditures are:
I. Revenue Budget
II. Surplus Budget
III. Deficit Budget
IV. Capital Budget
Answer:
I. Revenue Budget
Explanation: Revenue budget is a statement of the government’s estimated revenue receipts and revenue expenditures for a period of one financial year. Revenue receipts are recurring or repetitive in nature.
Q.15.What type of tax is helpful in reducing inequalities?
I. Indirect Tax
II. Direct Tax
III. Non Tax
IV. None
Answer:
II. Direct Tax
Explanation: It is directly imposed on people and it is clearly defined so it reduce inequality
Q.16.Disinvestment of PSUs comes under
I. Revenue Expenditure
II. Capital Expenditure
III. Public revenue
IV. Capital receipts
Answer:
IV.Capital receipts
Explanation: Disinvestment of PSUs comes under Capital receipts
Q.17.What is fiscal discipline?
I. Control over receipts
II. Control over expenditures
III. Control over imports
IV. Control over fiscal deficit
Answer:
II.Control over expenditures
Explanation: Control over expenditures means maintaining the Fiscal Discipline
MCQ Questions for CUET Economics Chapter-The government objective Set-2
Q.18.Government is equal to government expenditure is
I. Deficit Budget
II. Surplus Budget
III. Balanced Budget
IV. Revenue Budget
Answer:
III. Balanced Budget
Explanation: Balanced budget is a budget in which estimated government revenue raised by the government is equal to government expenditure
Q.19.The provision of expenditure every year according to plan proposals is called
I. Planned Expenditure
II. Unplanned Expenditure
III. Current Expenditure
IV. Fixed Expenditure
Answer:
I. Planned Expenditure
Explanation: Plan expenditure is that public expenditure which represents current and investment outlays that arises due to plan proposals.
Q.20.What are the sources of financing deficit?
I. Borrowings from public and foreign government.
II. Withdrawing from its cash balances with RBI.
III. Borrowings from the RBI.
IV. All
Answer:
IV. All
Explanation: From All of them government can finance its deficit.
Q.21.Defense Services are
I. Planned Expenditure
II. Not Expenditure
III. Non Planned Expenditure
IV. None
Answer:
III.Non Planned Expenditure
Explanation: Defense Services are Non Planned Expenditure because war can be broken anytime
Q.22.Is shifting of burden is not possible in direct tax
I. Yes
II. No
III. May be
IV. Not Sure
Answer:
II.No
Explanation: Direct tax is paid by the person on whom it is not imposed. Hence, shifting of burden is not possible
Q.23.Indirect Tax is
I. Progressive
II. Regressive
III. Neutral
IV. None
Answer:
II.Regressive
Explanation: Indirect tax is paid by the consumers and it has a regressive nature
Q.24.How is the budget divided
I. Balanced Budget & Unbalanced Budget
II. Surplus Budget and deficit Budget
III. Public Budget & Private Budget
IV. Revenue Budget and Capital Budget
Answer:
IV.Revenue Budget and Capital Budget
Explanation: Revenue Budget and Capital Budget is a broader classification of the Government Budget
Q.25.Which government is empowered to tax income
I. Central Government
II. State Government
III. Village Panchayat
IV. District Government
Answer:
I. Central Government
Explanation: Central Government is mainly empowered to tax income
Q.26.Excise duty is
I. Direct
II. Indirect Tax
III. Non Tax
IV. None
Answer:
II.Indirect Tax
Explanation: Indirect tax is imposed on commodities.
Q.28.Which governments have the power to impose taxes on sale of commodities
I. Central Government
II. State Government
III. Village Panchayat
IV. District Government
Answer:
II.State Government
Explanation: When the commodity is sold the sales tax is imposed by government