Q1. The non-tax revenue in the following is –
A. Export duty
B. Import duty
C. Dividend
D. Excise
Ans: C

Q2. What do you mean by Government budget?
Ans. It refers to the expected statement of receipts & expenditures of
the government over a time period of one year/for the coming financial

Q3. Dividends received from PSUs are part of the government’s –
A. Capital expenditure
B. Non-tax revenue receipts
C. Tax receipts
D. Capital receipts
Ans: B

Q4. Which of the following sources of receipts increases the liabilities
in the govt. budget?
A. Direct taxes
B. Recovery of loans
C. Borrowings
D. Dividend from PSU
Ans: C

Q5. Which of the following is a direct tax?
A. Corporation tax
B. Entertainment tax
C. Excise duty
D. Service tax
Ans. A

Q. Define direct tax.
Ans. Taxes for which the incidence and impact of tax falls on the same
person, example income tax burden of these taxes can‘t be shifted

Q6. Give one example of non-tax revenue receipts of government.
Ans. Donations, Registration fees
Q. Define indirect tax
Ans. It refers to the tax whose burden can be shifted to another person.
Example:- GST, Excise duty, Service tax

Q7. Which of the following is non-tax revenue?
A. Custom duty
B. Excise duty
C. Dividends
D. Import duty
Ans. C

Q8. Which of these is an revenue expenditure?
A. Purchase of shares
B. Advanced loans
C. Subsidies
D. Expenditure on land acquisition
Ans. C

Q9. Which of the following is not a revenue receipt?
A. Foreign grants
B. Profit of PSUs
C. Wealth tax
D. Recovery of loans
Ans. D

Q10. Which one of the following is a combination of direct taxes?
A. Excise duty & Wealth tax
B. Entertainment tax & Income tax
C. Custom duty & Service tax
D. Wealth tax & Income tax
Ans. D

Q11. What is a tax?
Ans. Tax refers to a compulsory payment made by an individual,
household, or a firm to the government without any return
Q. Direct tax is called direct because it is collected from –
Ans: The income earners

Q12. What do you mean by revenue expenditure
Ans. Revenue expenditure is the govt. expenditure which neither cause increase in assets nor causes decrease in govt’s liabilities.
Example: Expenditure on old age pensions, expenses on administrative services etc.
Q. Define revenue receipts in government budget ?’
Ans: Receipts which neither increases liabilities for the govt. nor causes any
decrease in the assets of the govt. are known as revenue receipts
Example: Tax receipts & Non-tax receipts

Q13. What do you mean by capital receipts?
Ans: The receipts which create corresponding liability for the government or which lead to reduction in assets of the govt.
Example: Loans by the govt., Disinvestment of PSUs
Q. Define capital expenditure
Ans: Expenditure of govt, which lead to increase in govt. assets or lead to
reduction in liabilities are termed a capital expenditure
Example: Loans to states, Expenditure on building infrastructure

Q14. Give two examples of indirect taxes.
Ans. Sales Tax, Value added tax, Services tax
Q. Give two examples of revenue expenditure
Ans: Salaries of govt. employees & administrative expenses

Q15. Give two examples of capital receipts .
Ans. Proceeds from disinvestment of PSUs & Loan from IMF
Q. Give examples of capital expenditure
Ans. Expenses on the construction of dams, highways

Q16. Fiscal deficit is equals to :
A. Borrowings
B. Interest payments
C. Interest payments – Borrowings
D. Borrowings – Interest payments
Ans. A

Q17. Primary deficit is equals to :
A. Borrowings
B. Interest payments
C. Borrowings less interest payments
D. Both borrowings & interest payments
Ans. C

Q18. Primary deficit in a govt. budget will be 0 when –
A. Revenue deficit =0
B. Net interest payments =0
C. Fiscal deficit =0
D. Fiscal deficit= interest payments
Ans. D
Q. Define fiscal deficit
Ans. It is the difference between the govt’s total expenditure & total receipts
excluding borrowings

Q19. Define primary deficit.
Ans. The difference between fiscal deficit & interest payments is known
as primary deficit
Q. What is meant by revenue deficit.
Ans. Revenue deficit is the excess of revenue expenditure over revenue

Q20. Borrowings in Govt. Budget are:
A. Revenue deficit
B. Fiscal deficit
C. Primary deficit
D. Tax deficit
Ans. B

Q21. Which of the following statements is true?
A. Fiscal deficit is the difference between total expenditure & total
B. Primary deficit is the difference between total receipt & interest
C. Fiscal deficit is the sum of primary deficit & interest payments
D. All of the above
Ans: C

Q22. Suppose you are a member of the Advisory committee of the
Finance minister of India , Suggest any one measure to control the
rising revenue deficit of the govt.
Ans. Increasing tax revenues & adopting measures to curb tax evasion ,
Disinvestment to be done where assets are not being used effectively
Q. Budget is presented in Parliament on –
Ans: February 1

Q23. The main types of Government Budget:
A. Surplus Budget
B. Deficit Budget
C. Balanced Budget
D. All of the above
Ans. D

Q24. Define public goods
Ans. These are those goods which can’t be provided through market
mechanism & hence must be provided by government, these goods
promote social welfare
Q. Define private goods
Ans. Private goods are those which can be provided through
transactions between consumers & producers, these goods aim at
profit maximisation

Q25. What is fiscal discipline?
Ans. It refers to the state of balance between govt’s revenue &
Q. Define paper taxes.
Ans: Taxes which carry significance only on paper , these are of little/no
significance in terms of revenue yield

Q26. Government expenditure on Mid-Day Meal scheme running in
government (state run) schools is a type of ……………….………..
expenditure in government budget
Ans. Revenue

Q27. The monetary policy generally targets to ensure………….……
(Choose the correct alternative)
A . price stability in the economy
B . employment generation in the country.
C . stable foreign relations.
D. greater tax collections for the government.
Ans: A

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