12th Class Economics Government Budget And The Economy / सरकार का बजट और अर्थव्यवस्था Question Bank

done Case Based MCQs - Government Budget and Economy Total Questions - 15

• question_answer1)

  Direction: Q. 1 to 2

  Read the following case study and answer the questions.

  Prime Minister Narendra Modi's second budget in seven months disappointed investors who were hoping for big-bang stimulus to revive growth in Asia's third-largest economy. The fiscal plan delivered by Finance Minister Nirmala Sitharaman proposed tax reductions for individuals and wider deficit targets, but failed to provide specific steps to fix a struggling financial sector, improve infrastructure and create jobs. Stocks slumped, reflecting the subdued sentiment.

  "Far from being a game changer, the budget provides little in terms of short-term growth stimulus," said Priyanka Kishore, head of India and South-East AsiaECONOMICS-At Oxford Economics Ltd. in Singapore. "While income tax cuts will provide some relief on the consumption front, the multiplier effect is low and the overall stance of the budget is not expansionary."

  The focus now shifts to the Reserve Bank of India's interest rate decision on February 6, 2020. However, having already cut interest rates five times last year and with inflation exceeding 7 per cent, well above the central bank's target, there's limited scope for Governor Shaktikanta Das to ease more.

  A direct tax cut in government budget helps to stimulate economic growth by
  A)
  increasing disposable income done clear
  B)
  increasing production activity done clear
  C)
  increasing demand . done clear
  D)
  Both [a] and [c] done clear
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• question_answer2)
  Decreasing tax is a fiscal measure to deal with ......... situation in an economy.
  A)
  Reducing Inequality done clear
  B)
  Reallocation done clear
  C)
  Both [a] and [b] done clear
  D)
  Neither [a] nor [b] done clear
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• question_answer3)
  What will be the impact on the overall money supply if government reduces income tax slabs?
  A)
  There will be more money supply in the economy. done clear
  B)
  There will be less money supply in the economy. done clear
  C)
  There will be no impact on the money supply. done clear
  D)
  It depends upon the behaviour of the targeted population. done clear
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• question_answer4)

  Assertion [A] A tax cut need not always leads to increase in economic growth in the economy.

  Reason [R] Inequality in distribution of income leads to uneven growth impacts.

  Choose from the options below.

  A)
  Assertion [A] is true and Reason [R] is correct reason of Assertion [A]. done clear
  B)
  Assertion [A] is true and Reason [R] is not correct reason of Assertion [A]. done clear
  C)
  Assertion [A] is false, Reason [R] is true done clear
  D)
  Both are false done clear
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• question_answer5)
  Choose the correct statement from below
  A)
  A tax cut in the economy widens fiscal deficit. done clear
  B)
  Fiscal deficit increases the burden of taxes on future generation. done clear
  C)
  Higher income groups should be taxed at a progressive rate. done clear
  D)
  All of the above statements are correct. done clear
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• question_answer6)

  Direction: Q. 6 to 10

  Read the following case study and answer the question.

  Budgetary deficits must be financed by either taxation, borrowing or printing money. Governments have mostly relied on borrowing, giving rise to what is called government debt. If the government continues to borrow year after year, then interest payments increase and these further increase the debt. Also, government borrowing from the people reduces the savings available to the private sector. This reduces capital formation and growth. These debts increases the burden on future generations as the debts raised today are required to be paid off in future.

  Budgetary deficits can be financed by
  A)
  taxation done clear
  B)
  borrowings done clear
  C)
  printing money done clear
  D)
  All of the above done clear
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• question_answer7)
  If the government borrows year after year, then this ......... interest payments.
  A)
  increases done clear
  B)
  decreases done clear
  C)
  has no effect on done clear
  D)
  None of the above done clear
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• question_answer8)
  Government borrowing ............ the savings available to the private sector.
  A)
  increases done clear
  B)
  decreases done clear
  C)
  do not impact done clear
  D)
  None of these done clear
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• question_answer9)
  Government borrowings ............... the burden on future generations.
  A)
  increase done clear
  B)
  decrease done clear
  C)
  do not impact done clear
  D)
  Either [a] or [b] done clear
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• question_answer10)

  Assertion [A] Budgetary deficits financed through monetising of debts leads to fall in purchasing power of money.

  Reason [R] Availability of more money in the economy then required leads to rise in price levels.

  A)
  Assertion [A] is true and Reason [R] is correct reason of Assertion [A]. done clear
  B)
  Assertion [A] is true and Reason [R] is not correct reason of Assertion [A]. done clear
  C)
  Assertion [A] is false, but Reason [R] is true done clear
  D)
  Both are false. done clear
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• question_answer11)

  Direction: Q. 11 to 15

  Read the following case study and answer the questions.

  Government budget is an annual estimated statement of receipt and expenditures of the government. Prepared annually with various objectives. The Finance Ministry of the country prepared the budget and it is presented by the Finance Minister. It is an annual process and prepared by the government at various level. A government budget is different from the Five Year Plans which are prepared with long-term objectives.

  However both of these are prepared and presented keeping in mind the objective of the government. An annual union budget is divided into several parts to take care of all types of incomes and expenditures. Mrs. Nirmala Sitharaman, the Finance Minister of the country announced two relief package during the Covid-19 Lockdown to help people getting food and source of income. This announcement was in addition to the budget presented during April 2020 to March 2021.

  The annual budget is prepared only by the union government. Choose from options below
  A)
  True done clear
  B)
  False done clear
  C)
  Partially true      done clear
  D)
  Incomplete statement done clear
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• question_answer12)
  The union budget is comprised of
  A)
  Revenue budget done clear
  B)
  Capital budget done clear
  C)
  Both [a] and [b] done clear
  D)
  Neither [a] nor [b] done clear
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• question_answer13)
  The union budget is presented in the Parliament by
  A)
  Group of Union Ministers done clear
  B)
  Prime Minister done clear
  C)
  Representative of Union Ministry done clear
  D)
  Finance Minister done clear
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• question_answer14)

  Assertion [A] Relief Package announced during covid out break is a non-planned expenditure.

  Reason [R] No provision can be made for any unforseen circumstances in the country.

  Alternatives

  A)
  Assertion [A] is true and Reason [R] is correct reason of Assertion [A]. done clear
  B)
  Assertion [A] is true and Reason [R] is not correct reason Assertion [A]. done clear
  C)
  Assertion [A] is false, but Reason [R] is true done clear
  D)
  Both are false done clear
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• question_answer15)
  A government budget is prepared
  A)
  half yearly done clear
  B)
  annually done clear
  C)
  quarterly done clear
  D)
  in 5 years done clear
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