Mock Test of Economic Unit II 5 for STGT
Marks-100 Time-50 Minute
Chung Sajak
1. What is a government budget?
A) A report on government debts
B) A financial statement showing expected receipts and proposed expenditure for a year
C) A plan for foreign investments
D) A balance sheet of banks
2. Who presents the Union Budget in India?
A) Prime Minister
B) Finance Minister
C) President
D) RBI Governor
3. What is the financial year in India?
A) January 1 – December 31
B) April 1 – March 31
C) July 1 – June 30
D) March 1 – February 28
4. What are the two main components of a budget?
A) Assets and liabilities
B) Receipts and expenditure
C) Taxes and subsidies
D) Savings and investment
5. Another name for the government budget is:
A) Balance Sheet
B) Annual Financial Statement
C) Fiscal Report
D) Economic Survey
6. What does the budget reflect?
A) Government policies only
B) Government’s income and planned spending
C) International trade balance
D) Stock market trends
7. Is the government budget legally required?
A) No
B) Yes, mandated by the Constitution
C) Only in special years
D) Only for states
8. What is the primary purpose of a budget?
A) To increase taxes only
B) To manage the economy and public resources efficiently
C) To control the stock market
D) To reduce population
9. How can a budget influence income distribution?
A) Through international trade
B) By taxation and welfare measures
C) By increasing inflation
D) By regulating imports
10. How does the budget affect inflation?
A) Through monetary policy only
B) Through fiscal policies controlling spending and taxation
C) By increasing imports
D) By changing population size
11. Which of the following is an objective of the budget?
A) Only increasing revenue
B) Economic stability through fiscal measures
C) Reducing international trade
D) Limiting population growth
12. How does the budget allocate resources?
A) By equal distribution to all sectors
B) By directing funds to priority sectors like health and education
C) By giving more to private companies
D) By printing money
13. Which objective reduces economic inequalities?
A) Economic growth
B) Income redistribution through taxes and subsidies
C) Controlling inflation
D) Increasing exports
14. How does the budget promote economic growth?
A) By restricting spending
B) By funding investment and development projects
C) By reducing employment
D) By controlling inflation only
15. Which objective focuses on social services?
A) Economic growth
B) Public welfare through education, healthcare, and social schemes
C) Debt management
D) Revenue collection
16. How does the budget manage public debt?
A) By ignoring borrowings
B) By planning borrowings and repayments strategically
C) By increasing taxes only
D) By selling assets only
17. How does the budget influence savings and investment?
A) Surplus budgets encourage savings; deficit budgets stimulate investment
B) It only affects savings
C) It reduces investment
D) No effect
18. How does the budget affect employment?
A) Through private sector only
B) By funding development and public sector projects
C) By lowering wages
D) By increasing inflation
19. Can a budget stabilize the economy?
A) No
B) Yes, through fiscal and monetary measures
C) Only during elections
D) Only during recessions
20. Which objective ensures long-term development?
A) Short-term expenditure control
B) Economic growth through infrastructure and capital expenditure
C) Revenue maximization
D) Controlling imports
21. How are government receipts classified?
A) Income and savings
B) Revenue receipts and capital receipts
C) Assets and liabilities
D) Taxes and fines only
22. Define revenue receipts.
A) Money borrowed from banks
B) Regular income that does not create a liability
C) Money received by selling assets
D) Profits from stocks
23. Give an example of tax revenue.
A) Loan recovery
B) Income tax collected from individuals
C) Sale of government property
D) Borrowings
24. Give an example of non-tax revenue.
A) Income tax
B) Customs duty
C) Fees, fines, and profits from public enterprises
D) GST
25. Define capital receipts.
A) Regular income
B) Money that either creates a liability or reduces assets
C) Export earnings
D) Tax collected from citizens
26. Name one source of capital receipt.
A) Income tax
B) Borrowings from public or financial institutions
C) Fees and fines
D) GST
27. Name another source of capital receipt.
A) Disinvestment of public enterprises
B) Customs duty
C) Excise duty
D) Service charges
28. Is GST a revenue or capital receipt?
A) Capital receipt
B) Revenue receipt
C) Both
D) None
29. Are recoveries of loans revenue or capital receipts?
A) Revenue
B) Capital
C) Both
D) None
30. Does interest on loans count as revenue receipt?
A) Yes, it is regular income
B) No, it is capital
C) Only for private loans
D) Only in foreign loans
31. How is government expenditure classified?
A) Revenue expenditure and capital expenditure
B) Short-term and long-term expenditure
C) Tax and non-tax expenditure
D) Current and future expenditure
32. Define revenue expenditure.
A) Spending that creates assets
B) Spending that does not create assets
C) Borrowings from public
D) Interest payments only
33. Give an example of revenue expenditure.
A) Building highways
B) Salaries of government employees
C) Repayment of loans
D) Buying machinery
34. Define capital expenditure.
A) Spending that reduces income
B) Spending that creates assets or reduces liabilities
C) Tax collection
D) Payment of salaries
35. Give an example of capital expenditure.
A) Subsidies
B) Construction of roads or government buildings
C) Interest payments
D) Salaries
36. Are pensions revenue or capital expenditure?
A) Revenue expenditure
B) Capital expenditure
C) Both
D) Neither
37. Are subsidies revenue or capital expenditure?
A) Revenue expenditure
B) Capital expenditure
C) Both
D) None
38. Is repayment of loans revenue or capital expenditure?
A) Revenue expenditure
B) Capital expenditure
C) Both
D) None
39. Does capital expenditure include development projects?
A) No
B) Yes, if they create infrastructure or assets
C) Only subsidies
D) Only interest payments
40. Is interest payment revenue or capital expenditure?
A) Capital expenditure
B) Revenue expenditure
C) Both
D) None
41. Define a balanced budget.
A) Total receipts exceed total expenditure
B) Total expenditure exceeds total receipts
C) Total receipts equal total expenditure
D) Government has no debt
42. Define a surplus budget.
A) Total expenditure exceeds total receipts
B) Total receipts exceed total expenditure
C) Expenditure equals receipts
D) Government borrows money
43. Define a deficit budget.
A) Total receipts exceed expenditure
B) Total expenditure exceeds total receipts
C) Expenditure equals receipts
D) Government has no debt
44. What does a surplus budget indicate?
A) Government is in debt
B) Government is saving or reducing debt
C) Government is borrowing
D) Government is printing money
45. What does a deficit budget indicate?
A) Government has extra funds
B) Government needs to borrow to meet expenditure
C) Government is reducing taxes
D) Government is saving
46. How does a balanced budget affect fiscal stability?
A) Causes inflation
B) Maintains equilibrium between revenue and spending
C) Reduces employment
D) Encourages deficit financing
47. Define revenue deficit.
A) Total expenditure exceeds total receipts
B) Revenue expenditure exceeds revenue receipts
C) Borrowing exceeds repayment
D) Capital expenditure exceeds revenue receipts
48. Define fiscal deficit.
A) Total revenue receipts exceed expenditure
B) Total expenditure exceeds total receipts excluding borrowings
C) Borrowings exceed capital receipts
D) Only revenue expenditure exceeds receipts
49. Define primary deficit.
A) Fiscal deficit plus interest payments
B) Fiscal deficit minus interest payments
C) Total revenue minus expenditure
D) Only capital expenditure
50. Which type of budget stimulates the economy?
A) Balanced budget
B) Deficit budget
C) Surplus budget
D) None
51. How does the budget regulate the economy?
A) By increasing imports
B) By controlling inflation, deflation, and fiscal stability
C) By printing more money only
D) By raising interest rates only
52. How does the budget fund development projects?
A) By raising taxes only
B) Through planned capital expenditure
C) Through revenue expenditure
D) By borrowing from foreign countries only
53. How does the budget reduce income inequalities?
A) By giving loans
B) By progressive taxation and welfare schemes
C) By increasing exports
D) By limiting imports
54. How does a surplus budget affect savings?
A) Reduces savings
B) Increases government and public savings
C) Has no effect
D) Reduces investment
55. How does a deficit budget affect investment?
A) Reduces economic activity
B) Encourages economic activity and investments
C) Reduces public spending
D) Increases savings only
56. How does the budget manage public debt?
A) By avoiding borrowings
B) By balancing borrowings and repayments efficiently
C) By increasing taxes only
D) By printing money
57. How does the budget provide social services?
A) By imposing fines
B) By allocating funds for education, healthcare, and welfare
C) By reducing subsidies
D) By limiting imports
58. How does the budget generate employment?
A) Through increasing imports
B) Through infrastructure and public sector projects
C) By reducing taxes
D) Through foreign investments only
59. How does the budget control inflation?
A) By regulating exports
B) Through fiscal measures regulating money supply and demand
C) By imposing subsidies only
D) By increasing public debt
60. How does the budget promote infrastructure development?
A) Through revenue expenditure
B) By allocating capital expenditure to construction projects
C) By reducing taxes
D) By borrowing only
61. Which of the following are examples of tax revenue?
A) Fees, fines, dividends
B) Income tax, customs duty, GST, excise duty
C) Loan recovery, disinvestment
D) Grants only
62. Which of the following are examples of non-tax revenue?
A) Income tax, GST
B) Fees, fines, interest, and dividends from public enterprises
C) Borrowings
D) Capital gains tax
63. Does profit from government companies count as revenue receipt?
A) No
B) Yes, it is included in revenue receipts
C) Only if taxed
D) Only if borrowed
64. Are royalties from natural resources revenue receipts?
A) No
B) Yes, as part of non-tax revenue
C) Only if taxed
D) Only if spent on capital projects
65. Are fines imposed by courts revenue receipts?
A) No
B) Yes, included in non-tax revenue
C) Only if above a certain limit
D) Only if collected monthly
66. Does service tax contribute to revenue receipts?
A) No
B) Yes, it is part of tax revenue
C) Only for imports
D) Only if collected monthly
67. Are capital gains taxes revenue receipts?
A) No
B) Yes, included in tax revenue
C) Only for individuals
D) Only for companies
68. Are interest receipts from loans part of revenue receipts?
A) No
B) Yes, they are non-tax revenue
C) Only from domestic loans
D) Only from foreign loans
69. Are grants from foreign countries revenue receipts?
A) No
B) Yes, if not creating liability
C) Only if borrowed
D) Only for capital projects
70. Does GST collection form part of revenue receipts?
A) No
B) Yes, as a major component of tax revenue
C) Only partially
D) Only for exports
71. Give examples of capital receipts.
A) Salaries, pensions, subsidies
B) Borrowings, disinvestment, and recovery of loans
C) Taxes and fees
D) Grants for welfare
72. Are government bonds capital receipts?
A) No
B) Yes, funds raised through bonds are capital receipts
C) Only if redeemed
D) Only for private investors
73. Are foreign loans considered capital receipts?
A) No
B) Yes, borrowings from foreign agencies are capital receipts
C) Only if repaid
D) Only grants
74. How does disinvestment affect government capital?
A) Reduces revenue
B) Selling public assets generates capital receipts
C) Creates recurring expenses
D) Reduces taxes
75. Do recoveries of past loans count as capital receipts?
A) No
B) Yes, loan repayments are capital receipts
C) Only interest is included
D) Only if from foreign sources
76. Are grants from foreign countries capital receipts?
A) Always
B) Only loans or asset transfers create capital receipts
C) All grants are capital receipts
D) Only if invested in projects
77. Does issuing bonds create government liability?
A) No
B) Yes, bonds are capital receipts and liabilities
C) Only if interest is paid
D) Only for domestic bonds
78. Does capital receipt increase government assets?
A) No
B) Certain receipts like disinvestment increase assets
C) Only loans
D) Only taxes
79. Does borrowing from the public generate capital receipts?
A) No
B) Yes, funds raised through loans form capital receipts
C) Only from foreign investors
D) Only for infrastructure projects
80. Do interest receipts belong to capital receipts?
A) Yes
B) No, interest receipts are revenue receipts
C) Only for loans to states
D) Only foreign loans
81. Give examples of revenue expenditure.
A) Construction of roads, schools
B) Salaries, pensions, subsidies, interest payments
C) Loan repayment
D) Disinvestment
82. Does defense salary fall under revenue expenditure?
A) No
B) Yes, salaries of personnel are revenue expenditure
C) Only pensions
D) Only equipment
83. Are social welfare payments revenue expenditure?
A) No
B) Yes, they are part of revenue expenditure
C) Only capital projects
D) Only for infrastructure
84. Are administrative costs revenue expenditure?
A) No
B) Yes, expenses of offices and operations are revenue expenditure
C) Only for capital projects
D) Only foreign-funded projects
85. Is interest payment on loans revenue or capital expenditure?
A) Capital expenditure
B) Revenue expenditure
C) Both
D) None
86. Is revenue expenditure recurring or one-time?
A) One-time
B) Mostly recurring
C) Only for infrastructure
D) Only for defense
87. Does revenue expenditure create assets?
A) Yes
B) No
C) Sometimes
D) Only for capital projects
88. Are government subsidies part of revenue expenditure?
A) No
B) Yes
C) Only for capital projects
D) Only for defense
89. Are pensions and retirement benefits revenue expenditure?
A) No
B) Yes, they fall under revenue expenditure
C) Only for defense personnel
D) Only if paid annually
90. Does maintenance of public buildings count as revenue expenditure?
A) No
B) Yes, maintenance expenses are revenue expenditure
C) Only if new construction
D) Only if funded by loans
91. Give examples of capital expenditure.
A) Salaries, pensions
B) Construction of roads, schools, hospitals, and machinery purchase
C) Subsidies
D) Interest payments
92. Does capital expenditure create assets?
A) No
B) Yes, results in physical or financial assets
C) Only partially
D) Only for loans
93. Is loan repayment considered capital expenditure?
A) No
B) Yes, repayment reduces liabilities
C) Only interest
D) Only foreign loans
94. Is investment in public enterprises capital expenditure?
A) No
B) Yes, investment that creates assets counts
C) Only loans
D) Only grants
95. Are defense equipment purchases capital expenditure?
A) No
B) Yes, procurement of equipment is capital expenditure
C) Only salaries
D) Only pensions
96. Is public infrastructure development capital expenditure?
A) No
B) Yes, development projects are capital expenditure
C) Only maintenance
D) Only subsidies
97. Is capital expenditure recurring or one-time?
A) Recurring
B) Mostly one-time and project-based
C) Only salaries
D) Only subsidies
98. Does capital expenditure promote economic growth?
A) No
B) Yes, infrastructure and development spending stimulate growth
C) Only subsidies
D) Only revenue spending
99. Does capital expenditure reduce liabilities?
A) No
B) Yes, certain spending like loan repayment reduces liabilities
C) Only revenue spending
D) Only subsidies
100. Can capital expenditure improve public services?
A) No
B) Yes, infrastructure, schools, hospitals, and roads improve services
C) Only revenue spending
D) Only subsidies
