MCQ Questions for Class 12 Economics Chapter 5 Government Budget and the Economy with Answers

Check the below NCERT MCQ Questions for Class 12 Economics Chapter 5 Government Budget and the Economy with Answers Pdf free download. MCQ Questions for Class 12 Economics with Answers were prepared based on the latest exam pattern. We have provided Government Budget and the Economy Class 12 Economics MCQs Questions with Answers to help students understand the concept very well.

Government Budget and the Economy Class 12 MCQs Questions with Answers

Government Budget Class 12 MCQ Question 1.
An annual statement of the estimated receipts and expenditure of the government over the fiscal year is known as
(A) Budget
(B) Income estimates
(C) Account
(D) Expenditure

Answer

Answer: (A) Budget


Government Budget And The Economy Class 12 MCQ Question 2.
Which of the following is an example of direct tax?
(A) VAT
(B) Excise duty
(C) Entertainment tax
(D) Wealth tax

Answer

Answer: (D) Wealth tax


Which of the following is an example of direct tax?

Govt Budget Class 12 MCQ Question 3.
What is the period of a fiscal year?
(A) 1 April to 31 March
(B) 1 January to 31 December
(C) 1 March to 28 February
(D) None of these

Answer

Answer: (A) 1 April to 31 March


Government Budget MCQ Class 12 Question 4.
When government spends more than it collects by way of revenue, it incurs ______
(A) Budget surplus
(B) Budget deficit
(C) Capital expenditure
(D) Revenue expenditure

Answer

Answer: (B) Budget deficit


Government Budget And The Economy MCQ Question 5.
The fiscal deficit is the difference between the government’s total expenditure and its total receipts excluding ______
(A) Interest
(B) Taxes
(C) Spending
(D) Borrowings

Answer

Answer: (D) Borrowings


MCQ On Government Budget Class 12 Question 6.
Which of the following is the component of a budget?
(A) Fiscal budget
(B) Capital budget
(C) Both of these
(D) None of these

Answer

Answer: (C) Both of these


Government Budget MCQ Question 7.
What is the annual statement of the government’s fiscal revenue and fiscal expenditure known?
(A) Budget
(B) Fiscal Budget
(C) Capital Budget
(D) All of these

Answer

Answer: (B) Fiscal Budget


MCQ Of Government Budget Class 12 Question 8.
How many types of revenue receipts are there?
(A) 2
(B) 3
(C) 4
(D) 6

Answer

Answer: (A) 2


Government Budget Class 12 MCQs Question 9.
The amount collected by the government as taxes and duties is known as _______
(A) Capital receipts
(B) Tax revenue receipts
(C) Non-tax revenue receipts
(D) All of these

Answer

Answer: (B) Tax revenue receipts


Class 12 Government Budget MCQ Question 10.
The amount collected by the government in the form of interest, fees, and dividends is known as ________
(A) Tax-revenue receipts
(B) Capital receipts
(C) Non-tax revenue receipts
(D) None of these

Answer

Answer: (C) Non-tax revenue receipts


MCQ Of Government Budget Question 11.
Borrowing in the government budget is:
(A) Revenue deficit
(B) Fiscal deficit
(C) Primary deficit
(D) Deficit in taxes

Answer

Answer: (B) Fiscal deficit


MCQ Of Chapter Government Budget Class 12 Question 12.
The non-tax revenue in the following is:
(A) Export duty
(B) Import duty
(C) Dividends
(D) Excise

Answer

Answer: (C) Dividends


Government Budget And Economy Class 12 MCQ Question 13.
The primary deficit in a government budget will be zero, when _______
(A) Revenue deficit is zero
(B) Net interest payments are zero
(C) Fiscal deficit is zero
(D) Fiscal deficit is equal to interest payment

Answer

Answer: (D) Fiscal deficit is equal to interest payment


Class 12 Economics Government Budget MCQ Question 14.
Direct tax is called direct because it is collected directly from:
(A) The producers on goods produced
(B) The sellers on goods sold
(C) The buyers of goods
(D) The income earners

Answer

Answer: (D) The income earners


MCQ On Government Budget Class 12 Pdf Question 15.
Financial Year in India is:
(a) April I to March 31
(b) January 1 to December 31
(c) October 1 to September 30
(d) None of the above

Answer

Answer: (a) April I to March 31


MCQ Of Govt Budget Class 12 Question 16.
Which objectives government attempts to obtain by Budget
(a) To Promote Economic Development
(b) Balanced Regional Development
(c) Redistribution of Income and Wealth
(d) All the above

Answer

Answer: (d) All the above


Government Budget Class 12 MCQ Questions Question 17.
Which is a component of Budget?
(a) Budget Receipts
(b) Budget Expenditure
(c) Both (a) and (b)
(d) None of the above

Answer

Answer: (c) Both (a) and (b)


Question 18.
Which is a component of the Budget Receipt?
(a) Revenue Receipt
(b) Capital Receipt
(c) Both (a) and (b)
(d) None of the above

Answer

Answer: (c) Both (a) and (b)


Question 19.
Tax revenue of the Government includes :
(a) Income Tax
(b) Corporate Tax
(c) Excise Duty
(d) All of these

Answer

Answer: (d) All of these


Question 20.
Which is included in the Direct Tax?
(a) Income Tax
(b) Gift Tax
(c) Both (a) and (b)
(d) Excise Duty

Answer

Answer: (c) Both (a) and (b)


Question 21.
Which is included in Indirect Tax?
(a) Excise Duty
(b) Sales Tax
(c) Both (a) and (b)
(d) Wealth Tax

Answer

Answer: (c) Both (a) and (b)


Question 22.
The expenditures which do not create assets for the government is called :
(a) Revenue Expenditure
(b) Capital Expenditure
(c) Both (a) and (b)
(d) None of the above

Answer

Answer: (a) Revenue Expenditure


Question 23.
Direct tax is :
(a) Income Tax
(b) Gift Tax
(c) Both (a) and (b)
(d) None of these

Answer

Answer: (c) Both (a) and (b)


Question 24.
In India, one rupee note is issued by:
(a) Reserve Bank of India
(b) Finance Ministry of Government of India
(c) State Bank of India
(d) None of these

Answer

Answer: (b) Finance Ministry of Government of India


Question 25.
Capital budget consist of:
(a) Revenue Receipts and Revenue Expenditure
(b) Capital Receipts and Capital Expenditure
(c) Direct and Indirect Tax
(d) None of these

Answer

Answer: (b) Capital Receipts and Capital Expenditure


Question 26.
Which of the following is an indirect tax?
(a) Excise Duty
(b) Sales Tax
(c) Custom Duty
(d) All of these

Answer

Answer: (d) All of these


Question 27.
Which type of expenditure is made in bridge construction?
(a) Capital Expenditure
(b) Revenue Expenditure
(c) Both (a) and (b)
(d) None of the above

Answer

Answer: (a) Capital Expenditure


Question 28.
Which of the following budget is suitable for developing economies?
(a) Deficit Budget
(b) Balanced Budget
(c) Surplus Budget
(d) None of these

Answer

Answer: (a) Deficit Budget


Question 29.
What is the duration of a Budget?
(a) Annual
(b) Two Years
(c) Five Years
(d) Ten Years

Answer

Answer: (a) Annual


Question 30.
Which of the following is included in fiscal policy?
(a) Public Expenditure
(b) Tax
(c) Public Debt
(d) All of these

Answer

Answer: (d) All of these


Question 31.
Which of the following is the capital expenditure of the government?
(a) Interest Payment
(b) Purchase of House
(c) Expenses on Machinery
(d) All of the above

Answer

Answer: (a) Interest Payment


Question 32.
The budget may include:
(a) Revenue Deficit
(b) Fiscal Deficit
(c) Primary Deficit
(d) All of these

Answer

Answer: (d) All of these


Question 33.
Which of the following statement is true?
(a) Fiscal deficit is the difference between total expenditure and total receipts
(b) Primary deficit is the difference between total receipt and interest payments
(c) Fiscal deficit is the sum of primary deficit and interest payment
(d) All of these

Answer

Answer: (c) Fiscal deficit is the sum of primary deficit and interest payment


Question 34.
Budget:
(a) is a description of income-expenditure of government
(b) is a document of the economic policy of the government
(c) is a description of non-programs of the government
(d) All of these

Answer

Answer: (d) All of these


Question 35.
In an unbalanced budget:
(a) Income is greater than expenditure
(b) Expenditure is higher relative to income
(c) Deficit is covered by loans or printing of notes
(d) Only (b) and (c)

Answer

Answer: (d) Only (b) and (c)


Question 36.
Which is included in indirect tax?
(a) Income tax
(b) Wealth tax
(c) Excise Duty
(d) Gift tax

Answer

Answer: (c) Excise Duty


Question 37.
Which one of the following is a pair of direct tax?
(a) Excise duty and Wealth Tax
(b) Service Tax and Income Tax
(c) Excise Duty and Service Tax
(d) Wealth Tax and Income Tax

Answer

Answer: (d) Wealth Tax and Income Tax


Question 38.
Which of the following is not a revenue receipt?
(a) Recovery of Loans
(b) Foreign Grants
(c) Profits of Public Enterprise
(d) Wealth Tax

Answer

Answer: (a) Recovery of Loans


Question 39.
Which of the following is a correct measure of the primary deficit?
(a) Fiscal deficit minus revenue deficit
(b) Revenue deficit minus interest payments
(c) Fiscal deficit minus interest payments
(d) Capital expenditure minus revenue expenditure

Answer

Answer: (c) Fiscal deficit minus interest payments


Question 40.
The duration of the Government budget is:
(a) 5 years
(b) 2 years
(c) 1 year
(d) 10 years

Answer

Answer: (c) 1 year


Question 41.
Budget is presented in the Parliament by:
(a) Prime Minister
(b) Home Minister
(c) Finance Minister
(d) Defence Minister

Answer

Answer: (c) Finance Minister


Question 42.
Budget speech in Lok Sabha is given by:
(a) President
(b) Prime Minister
(c) Finance Minister
(d) Home Minister

Answer

Answer: (c) Finance Minister


Question 43.
Professional tax is imposed by:
(a) Central Government
(b) State Government
(c) Municipal Corporation
(d) Gram Panchayat

Answer

Answer: (b) State Government


Question 44.
From the following which is included in the direct tax:
(a) Income Tax
(b) Gift Tax
(c) Both (a) and (b)
(d) Excise Tax

Answer

Answer: (c) Both (a) and (b)


From the following which is included in the direct tax:

Question 45.
Who issues 1 rupee note in India:
(a) Reserve Bank of India
(b) Finance Ministry of India
(c) State Bank of India
(d) None of these

Answer

Answer: (b) Finance Ministry of India


Fill in the blanks:

Question 1.
A deficit budget is that in which total expenditure is ________ total receipts.

Answer

Answer: greater than


Question 2.
Revenue deficit is that in which revenue receipts are ________ revenue expenditure.

Answer

Answer: less than


Question 3.
_______ tax is that in which the final burden of the tax fall on the person who pays it.

Answer

Answer: Direct


Question 4.
Tax is a legally compulsory payment imposed by the _______ on income and property of persons and companies.

Answer

Answer: Government


Question 5.
Recovery of loan is treated as capital receipt because it leads to __________

Answer

Answer: reduction of assets


Question 6.
Primary Deficit = Fiscal Deficit minus __________

Answer

Answer: Interest on Debt


Question 7.
________ are levied on goods and services.

Answer

Answer: Indirect taxes


Question 8.
_________ does not have any impact on the asset-liability status of the government.

Answer

Answer: Revenue budget


Question 9.
The government can influence the allocation of resources through the implementation of appropriate _________

Answer

Answer: fiscal policy


Question 10.
__________ is a document containing income and expenditure of the government.

Answer

Answer: Budget


Question 11.
Income tax is _________ tax.

Answer

Answer: Direct


Question 12.
_________ tax is levied on the value of the goods.

Answer

Answer: Advalorem


Question 13.
Service tax is levied by the ________

Answer

Answer: Central


Question 14.
_________ budget is considered good for the country.

Answer

Answer: Deficit


Question 15.
Finance bill contains _________ proposals.

Answer

Answer: Tax


Question 16.
Government budget is presented on the last day of _________

Answer

Answer: February


State true or false :

Question 1.
Public goods are collectively consumed.

Answer

Answer: True


Question 2.
There is a feasible way of excluding anyone from enjoying the benefits of public goods.

Answer

Answer: False


Question 3.
The three functions of allocation, redistribution, and stabilization are operated through the expenditure and receipts of the government.

Answer

Answer: True


Question 4.
The deficit decreases in a recession and increases in a boom, even without any change in fiscal policy.

Answer

Answer: False


Question 5.
Indirect taxes are not convenient to realise.

Answer

Answer: False


Question 6.
Payment of salaries to the government employees is a capital payment.

Answer

Answer: False


Question 7.
Expenditure made on the establishment of the metro rail line in Delhi is a capital expenditure.

Answer

Answer: True


Question 8.
Public borrowing is a capital receipt.

Answer

Answer: True


Question 9.
Recovery of loan is a revenue receipt.

Answer

Answer: False


Question 10.
Service tax is a direct tax.

Answer

Answer: False


Question 11.
Grants by the government are treated as revenue expenditure.

Answer

Answer: True


Question 12.
Excess of capital expenditure over capital receipt is called revenue deficit.

Answer

Answer: False


Question 13.
A deficit budget is not considered a good budget.

Answer

Answer: False


Question 14.
Electricity tax is levied by the State Government.

Answer

Answer: True


Question 15.
The budget speech is given by the Finance Minister.

Answer

Answer: True


Question 16.
Central excise duty is a direct tax.

Answer

Answer: False


Question 17.
The interest payment is a planned item.

Answer

Answer: False


Question 18.
During deflation surplus budget is made.

Answer

Answer: True


Question 19.
The rail budget is generally not included in the annual budget.

Answer

Answer: True


Match the following

Question 1.

‘A’ ‘B’
1. Income and expenditure of the government (a) 31 March
2. First of all finance bill is presented in the (b) Budget
3. Budget is presented on (c) Details about income and expenditure
4. Aim or Objective of the budget (d) Lok sabha
5. Main feature of the budget (e) Economic development.
Answer

Answer:

‘A’ ‘B’
1. Income and expenditure of the government (b) Budget
2. First of all finance bill is presented in the (d) Lok sabha
3. Budget is presented on (a) 31 March
4. Aim or Objective of the budget (e) Economic development.
5. Main feature of the budget (c) Details about income and expenditure

Question 2.

Column-I Column-II
1. Surplus budget (A) Revenue receipts > Revenue expenditure
2. Deficit budget (B) Fiscal deficit – interest payments
3. Revenue deficit (C) Govt. Expenditure < Govt. Receipts
4. Fiscal deficit (D) Income tax, corporate profit tax
5. Primary deficit (E) Expenditure on roads and health
6. Examples of direct tax (F) Govt. Expenditure > Govt. Receipts
7. Examples of indirect tax (G) Loans granted to state governments
8. Examples of development expenditure (H) Total expenditure > total receipts
9. Examples of non-development expenditure (I) Sale tax, excise duty
10. Examples of capital expenditure (J) Sales tax, Income tax
11. Sources of tax revenue (K) Expenditure on administration and defence
Answer

Answer:

Column-I Column-II
1. Surplus budget (C) Govt. Expenditure < Govt. Receipts
2. Deficit budget (F) Govt. Expenditure > Govt. Receipts
3. Revenue deficit (A) Revenue receipts > Revenue expenditure
4. Fiscal deficit (H) Total expenditure > total receipts
5. Primary deficit (B) Fiscal deficit – interest payments
6. Examples of direct tax (D) Income tax, corporate profit tax
7. Examples of indirect tax (I) Sale tax, excise duty
8. Examples of development expenditure (E) Expenditure on roads and health
9. Examples of non-development expenditure (K) Expenditure on administration and defence
10. Examples of capital expenditure (G) Loans granted to state governments
11. Sources of tax revenue (J) Sales tax, Income tax

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