[Solved] Government budgeting and Fiscal Policy MCQ [Free PDF] - Objective Question Answer for Government budgeting and Fiscal Policy Quiz - Download Now! (2022)

Table of Contents
______ deal(s) with the taxation and expenditure decisions of the Government. Which of the following is an example of direct tax in India? Which of the following tax gives maximum revenue to the government of India? As per the Union Budget of 2021-22, how many regional national institutes of virology will be set up? How much amount have been allocated to the Khelo India Programme in Union Budget 2022? Goods and Service Tax Council (GST) of India is headed by: Which of the following scheme's next phase was announced in the Union Budget 2022? Which one of the following best describes the term 'capital gains tax' in India? The excess of total expenditure of Government over its total receipts, excluding borrowings, is known as Which of the following tax is not included in Goods and Services Tax (GST)? Which of the following organisation formulates the Fiscal Policy in India? As per Economic Survey 2021-22, the _________ sector contributed the most to the GDP of India during the year. The central government's development expenditure does NOT include ____________. Which of the following is NOT the work of the legislature? How many crores have been allocated for completion of 80 lakh houses under the PM Awas Yojana, both Rural and Urban, in 2022-23? The merger of the Railways Budget with the General Budget took place in ______ . Which was the highest allocation Ministry in Budget 2021-22? Fiscal policy creates a surplus, when the total _______. As per Union Budget 2021-22, Fiscal deficit is estimated at ______ per cent of GDP in 2021- 22. Videos

______ deal(s) with the taxation and expenditure decisions of the Government.

  1. Monetary Policy
  2. Labour Market Policies
  3. Trade Policy
  4. Fiscal Policy

Answer (Detailed Solution Below)

Option 4 : Fiscal Policy

The correct answer isFiscal Policy.

[Solved] Government budgeting and Fiscal Policy MCQ [Free PDF] - Objective Question Answer for Government budgeting and Fiscal Policy Quiz - Download Now! (1)Key Points

  • Fiscal Policy dealswith the taxation and expenditure decisions of the Government.

[Solved] Government budgeting and Fiscal Policy MCQ [Free PDF] - Objective Question Answer for Government budgeting and Fiscal Policy Quiz - Download Now! (2)Additional Information

  • Monetary policy & Fiscal Policy
    • Monetary policy and fiscal policy are two different tools that have an impact on the economic activity of a country.
    • Monetary policies are formed and managed by the central banks of a country and such a policy is concerned with the management of money supply and interest rates in an economy.
    • Fiscal policy is related to the way a government is managing the aspects of spending and taxation.
    • It is the government’s way of stabilising the economy and helping in the growth of the economy.
    • Governments can modify the fiscal policy by bringing in measures and changes in tax rates to control the fiscal deficit of the economy.
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Which of the following is an example of direct tax in India?

  1. Entertainment tax
  2. Stamp & Registration fees
  3. Sales tax
  4. Wealth tax

Answer (Detailed Solution Below)

Option 4 : Wealth tax

The correct answer is Wealth tax.

Direct taxWhen a person bears the burden as well as makes payment to thegovernment
Example of Direct Tax1.Corporation tax2. Income tax3. Interest tax
4. Expenditure tax5. Wealth tax
Indirect TaxWhen a seller collects the tax from the buyer first and then pays the same to the government.
Example of Indirect Tax1. Customs duties 2. Service tax 3. Sales tax
4. State excise duty 5. Stamp & Registration fees 6.Entertainment tax
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Which of the following tax gives maximum revenue to the government of India?

  1. Corporate tax
  2. Excise duty
  3. Income tax
  4. Customs duty

Answer (Detailed Solution Below)

Option 1 : Corporate tax

The correct answer is CorporateTax.

[Solved] Government budgeting and Fiscal Policy MCQ [Free PDF] - Objective Question Answer for Government budgeting and Fiscal Policy Quiz - Download Now! (3)Key Points

  • Corporate taxis the single largest source of incometo the government of India.
  • According to the Budget for 2019-20 presented in Parliament by Finance Minister Nirmala Sitharaman, Goods and Services Tax collections will contribute 19 paise in every rupee revenue.
  • Corporation tax is the single largest source of income, contributing 21 paise to each rupee earned.

[Solved] Government budgeting and Fiscal Policy MCQ [Free PDF] - Objective Question Answer for Government budgeting and Fiscal Policy Quiz - Download Now! (4)Important Points

  • Taxes are generally an involuntary fee levied on individuals and corporations by the government to finance government activities.
  • There are two types of Taxes in India- Direct Tax and Indirect Tax.
  • Direct Tax
    • The tax that is levied by the government directly on the individuals or corporations is called Direct Taxes.
    • Income Tax, Corporation/Municipal Tax and Wealth Tax are some of the examples of Direct Tax.
    • They are progressive in nature.
  • Indirect Tax
    • The tax that is levied by the government on one entity (Manufacturer of goods), but is passed on to the final customer by the manufacturer.
    • VAT, Service tax, GST, Excise duty, entertainment tax and Customs Duty are some of the examples of Indirect Tax.
    • They are regressive in nature.
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As per the Union Budget of 2021-22, how many regional national institutes of virology will be set up?

  1. Six
  2. Two
  3. Three
  4. Four

Answer (Detailed Solution Below)

Option 4 : Four

The correct answer isFour.

[Solved] Government budgeting and Fiscal Policy MCQ [Free PDF] - Objective Question Answer for Government budgeting and Fiscal Policy Quiz - Download Now! (5)Key Points

(Video) Top 50 MCQ On Union Budget 2022-23 in Hindi | Union Budget 2022 Important Questions | Ashish Gautam

  • Union Budget of 2021-22 was the first-ever digital Union Budget.
  • It was presented by Union Finance Minister Nirmala Sitharaman.
  • As per the Union Budget of 2021-22, The central government has announced the setting up of four regional institutes of virology.
    • Regional NIV will help in efficiently countering the threats of viral pandemics/epidemics in the future.
  • Apart from the new virology institutes the budget proposals also include the setting up of a regional research platform for the WHO South-East Asia region.
  • It also established the National Institute of One Health (NIO) at Nagpur for research in ‘One Health’.
  • The Union Budget 2021allocated Rs 2,663 crore for Health Research for the upcoming fiscal year 2021-22.

[Solved] Government budgeting and Fiscal Policy MCQ [Free PDF] - Objective Question Answer for Government budgeting and Fiscal Policy Quiz - Download Now! (6)Additional Information

  • The Budget proposals for 2021-22 rest on 6 pillars.
    1. Health and Wellbeing
    2. Physical & Financial Capital, and Infrastructure
    3. Inclusive Development for Aspirational India
    4. Reinvigorating Human Capital
    5. Innovation and R&D
    6. Minimum Government and Maximum Governance
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How much amount have been allocated to the Khelo India Programme in Union Budget 2022?

  1. 174 crore.
  2. 874 crore.
  3. 974 crore.
  4. 1004 crore.

Answer (Detailed Solution Below)

Option 3 : 974 crore.

The correct answer is974 crore.

[Solved] Government budgeting and Fiscal Policy MCQ [Free PDF] - Objective Question Answer for Government budgeting and Fiscal Policy Quiz - Download Now! (7)Key Points

  • The central government hasallocated Rs 3062.60 crore for the financial year 2022-23,an increase of Rs 305.58 crore.
  • In the previousfinancial year, the government had allocated Rs 2596.14 crore for sports, which was later revised to Rs 2757.02 crore.
  • The financial allocation towards the Khelo India programme, which got Rs 657.71 crore in the last budget, was increased to Rs 974 crore.

[Solved] Government budgeting and Fiscal Policy MCQ [Free PDF] - Objective Question Answer for Government budgeting and Fiscal Policy Quiz - Download Now! (8)Additional Information

  • On 01 February 2022, Union Finance Minister Nirmala Sitharamanannounced that the government will launch the next phase of Ease of Doing Business.
  • It will be known as 'Ease of Doing Business 2.0'.
  • The new phase would be guided by the active involvement of the states, digitization of manual processes, and interventions.
  • It will also have the integration of the central and the state-level systems through IT bridges.
  • It will provide single-point access for all citizen-centric services, and standardization and removal of overlapping compliances.
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Goods and Service Tax Council (GST) of India is headed by:

  1. Prime Minister
  2. Finance Minister
  3. Finance Secretary
  4. Speaker of Lok Sabha

Answer (Detailed Solution Below)

Option 2 : Finance Minister

The correct answer isFinance Minister.

[Solved] Government budgeting and Fiscal Policy MCQ [Free PDF] - Objective Question Answer for Government budgeting and Fiscal Policy Quiz - Download Now! (9)Key Points

  • GST Council is the governing body of GST with 33 members.
  • Goods and Service Tax Council (GST) of India is headed bythe union finance minister.
  • The GST Council's first chairman was Arun Jaitley.
  • The GST council is currently chaired by Union Finance Minister Nirmala Sitharaman.
  • The GST council is established under Article 279 A of the Indian constitution.

[Solved] Government budgeting and Fiscal Policy MCQ [Free PDF] - Objective Question Answer for Government budgeting and Fiscal Policy Quiz - Download Now! (10)Important Points

  • Under GST present goods and services are taxed at 0%, 5%, 12%, 18% & 28%.
  • GST (Goods and Services Tax) is an indirect tax in India that applies to the manufacture, sale, and consumption of goods and services.
  • In India, the Goods and Services Tax (GST) went into effect on July 1, 2017.
  • As part of the 101st Amendment, the GST was enacted.
  • The state of Assam was the first to approve the GST bill.
  • Odisha is the 16th state to vote in favor of the GST bill.
  • GST implementation needs the assent of 16 states.
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Which of the following scheme's next phase was announced in the Union Budget 2022?

  1. Ease of Doing Business
  2. Stand Up India, Start Up India
  3. Aatmanirbhar Bharat
  4. Make In India

The correct answer isEase of Doing Business.

[Solved] Government budgeting and Fiscal Policy MCQ [Free PDF] - Objective Question Answer for Government budgeting and Fiscal Policy Quiz - Download Now! (11)Key Points

  • On 01 February 2022, Union Finance Minister Nirmala Sitharamanannounced that the government will launch the next phase of Ease of Doing Business.
  • It will be known as 'Ease of Doing Business 2.0'.
  • The new phase would be guided by the active involvement of the states, digitization of manual processes, and interventions.
  • It will also have the integration of the central and the state-level systems through IT bridges.
  • It will provide single-point access for all citizen-centric services, and standardization and removal of overlapping compliances.
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Which one of the following best describes the term 'capital gains tax' in India?

  1. Tax on dividend received from corporate bonds.
  2. Tax on profit from the sale of a capital asset during a year.
  3. Tax on interest received from bank fixed deposits.
  4. Tax on profit from sale of shares held for more 12 months.

Answer (Detailed Solution Below)

Option 2 : Tax on profit from the sale of a capital asset during a year.

The correct answer isTax on profit from the sale of a capital asset during a year.

  • A capital gains tax (CGT) is a tax on the profit realized on the sale of a non-inventory asset.
  • The most common capital gains are realized from the sale of stocks, bonds, precious metals, real estate, and property.

[Solved] Government budgeting and Fiscal Policy MCQ [Free PDF] - Objective Question Answer for Government budgeting and Fiscal Policy Quiz - Download Now! (12)Additional Information

(Video) SI Sub inspector Cg police old question paper इस पैटर्न से प्रश्न आ सकता है

Types of Taxes:

  • There are different types of tax as follows:
  • Direct Tax:
    • It comprises the tax which we pay directly to the government. These taxes are levied on an individual. Different types of Direct taxes are:
      • Income Tax
      • Gift Tax
      • Wealth Tax
      • Capital Gains Tax
      • Securities transaction tax
      • Corporate tax
  • Indirect Tax:
    • These taxes are not levied on an individual but on goods and services.
    • Various types of Indirect taxes are;-
      • Sales Tax
      • Services Tax
      • Goods and Services Tax
      • Value Added Tax
      • Customs Duty
      • Toll Tax
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The excess of total expenditure of Government over its total receipts, excluding borrowings, is known as

  1. Primary deficit
  2. Fiscal deficit
  3. Current deficit
  4. Capital deficit

Answer (Detailed Solution Below)

Option 2 : Fiscal deficit

The correct answer isFiscal deficit.

[Solved] Government budgeting and Fiscal Policy MCQ [Free PDF] - Objective Question Answer for Government budgeting and Fiscal Policy Quiz - Download Now! (13)Key Points

  • Fiscal Deficit is the difference between the total income of the government (total taxes and non-debt capital receipts) and its total expenditure.
  • A recurring high fiscal deficit means that the government has been spending beyond its means.
  • The government meets thefiscal deficit by borrowing money. In a way, the total borrowing requirements of the government in a financial year are equal to the fiscal deficit in that year.
  • A fiscal deficit situation occurs when the government’s expenditure exceeds its income.
  • This difference is calculated both in absolute terms and also as a percentage of the Gross Domestic Product (GDP) of the country.
  • Fiscal Deficit formula:
    • ​Fiscal Deficit = Total expenditure of the government (capital and revenue expenditure) – Total income of the government (Revenue receipts + recovery of loans + other receipts)

[Solved] Government budgeting and Fiscal Policy MCQ [Free PDF] - Objective Question Answer for Government budgeting and Fiscal Policy Quiz - Download Now! (14)Additional Information

  • Constitutes the government’s total income or receipts:
  • Revenue receipts of the government:
    • Corporation Tax.
    • Income Tax.
    • Custom Duties.
    • Union Excise Duties.
    • GST and taxes of Union territories.
  • Non-tax revenues:
    • Interest Receipts.
    • Dividends and Profits.
    • External Grants.
    • Other non-tax revenues.
    • Receipts of union territories.
  • Expenditures of the government:
    • Revenue Expenditure.
    • Capital Expenditure.
    • Interest Payments.
    • Grants-in-aid for creation of capital assets.
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Which of the following tax is not included in Goods and Services Tax (GST)?

  1. Excise Duty
  2. Custom Duty
  3. Value Added Tax
  4. Service Tax

Answer (Detailed Solution Below)

Option 2 : Custom Duty

The correct answer is Custom Duty.

[Solved] Government budgeting and Fiscal Policy MCQ [Free PDF] - Objective Question Answer for Government budgeting and Fiscal Policy Quiz - Download Now! (15)Key Points

  • Custom Duty tax is not included in Goods and Services Tax (GST).
  • Customs duty refers to the tax imposed on goods when they are transported across international borders.
    • In simple terms, it is the tax that is levied on the import and export of goods.
  • The government uses this duty to raise its revenues, safeguard domestic industries, and regulate the movement of goods.
    • Customs duty is a form of indirect tax which is imposed at the time of both import and export of goods and services.
    • The tax which is imposed on the import of goods and services are is known as Import duty and for export of goods and services are known as Export duty.
  • Hence, option 2 is correct.

[Solved] Government budgeting and Fiscal Policy MCQ [Free PDF] - Objective Question Answer for Government budgeting and Fiscal Policy Quiz - Download Now! (16)Additional Information

  • Goods and services are divided into five different tax slabs for collection of tax - 0%, 5%, 12%, 18% and 28%.
    • However, petroleum products, alcoholic drinks, and electricity are not taxed under GST and instead are taxed separately by the individual state governments, as per the previous tax system.
  • Excise Duty :
    • Excise duty is a form of tax imposed on goods for their production, licensing and sale.
    • Today, excise duty applies only to petroleum and liquor.
    • Excise duty was levied on manufactured goods and levied at the time of removal of goods, while GST is levied on the supply of goods and services.
  • Value Added Tax :
    • Value-added tax (VAT) is a type of indirect tax levied on goods and services for value-added at every point of production or distribution cycle, starting from raw materials and going all the way to the final retail purchase.
    • Because the consumer bears the entire tax, VAT is also a consumption tax.
  • Service Tax :
    • Service tax is a tax levied by the government on service providers on certain service transactionsbut is actually borne by the customers.
    • It is categorized under Indirect Tax and came into existence under the Finance Act, 1994.
    • This tax is not applicable in the state of Jammu & Kashmir.
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Which of the following organisation formulates the Fiscal Policy in India?

  1. NITI Ayog
  2. Ministry of Commerce and Industry
  3. Ministry of Finance
  4. Reserve Bank of India

Answer (Detailed Solution Below)

Option 3 : Ministry of Finance

The correct answer is theMinistry of Finance.

[Solved] Government budgeting and Fiscal Policy MCQ [Free PDF] - Objective Question Answer for Government budgeting and Fiscal Policy Quiz - Download Now! (17)Key Points

  • Fiscal policy is formulated by the Ministry of Finance.
  • Fiscal policy has been defined as ‘the policy of the government with regard to the level of government purchases, the level of transfers, and the tax structure’.
  • Fiscal policy is also defined as the policy which handles public expenditure and tax to direct and stimulate the level of economic activity.
  • India's fiscal policy always tries to reduce its deficit by enhancing tax revenue and controlling expenditure.
  • Parliament of India in 2003 enacted the Fiscal Responsibility And Budget Management Actwhich provides for prudent fiscal management to be followed by the Government.

[Solved] Government budgeting and Fiscal Policy MCQ [Free PDF] - Objective Question Answer for Government budgeting and Fiscal Policy Quiz - Download Now! (18)Additional Information

  • NITI Ayog: NITI Ayog is a think tank of theGovernment of India, which works in the area of policy research and formulation.
  • Ministry of Commerce and Industry: It works in the area of trade facilitation and related policy for export and imports.
  • Reserve Bank of India: RBIis the Central Bank of India that formulates monetary policy and regulates other banks in India.
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As per Economic Survey 2021-22, the _________ sector contributed the most to the GDP of India during the year.

  1. Medical
  2. Service
  3. Agricultural
  4. Education

Answer (Detailed Solution Below)

Option 2 : Service

The correct answer isService.

(Video) Financial Management Solved MCQs

[Solved] Government budgeting and Fiscal Policy MCQ [Free PDF] - Objective Question Answer for Government budgeting and Fiscal Policy Quiz - Download Now! (19)Key Points

  • According to the Economic Survey 2021-2022, The Servicesector has seen a growth rate of 8.2% and contributed over 50% of India's GDPin 2021-2022.
  • Nirmala Sithraman presented the Economic Survey 2021-22 in Parliament on 31st January 2022.
  • Some other fiscal developments as per the Survey are as follows:
    • The revenue receipts(April-November 2021) from Central Government have gone up by 67.2%.
    • Gross Tax Revenue registered a growth of over 50% ( April-November 2021).
    • Central Government debt has gone up from 49.1%(2019-20) to 59.3%(2020-21) of GDP
  • As per the Economic Survey 2021-22, the foreign exchange reserves touched USD 633.6 billion(as of Dec 31, 2021).
  • According to the Economic Survey 2021-22, the repo rate was maintained at 4% in 2021-22.
  • The Economic Survey also revealed that Rs. 89,066 crores was raised via 75 Initial Public Offering (IPO) issues in April-November 2021.

[Solved] Government budgeting and Fiscal Policy MCQ [Free PDF] - Objective Question Answer for Government budgeting and Fiscal Policy Quiz - Download Now! (20)Additional Information

  • TheEconomic Surveywasfirst releasedin1950-51andpresented withthebudget until 1964.
  • The Economic Survey wasseparatedfrom the budgetafter 1964.
  • V Anantha Nageswaranis thecurrentChief Economic Advisor(CEA).
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The central government's development expenditure does NOT include ____________.

  1. Expenditure on social and community services
  2. Grants to states
  3. Defense expenditure
  4. Expenditure on economic services

Answer (Detailed Solution Below)

Option 3 : Defense expenditure

The correct answer is option 3 i.e Defense expenditure.

  • Development Expenditure:
    • It is the money incurred by the governmenton the social and economic development of the country.
    • Expenditureon economic service,expenditureon social and communist services, grants to states are examples ofdevelopmental expenditures.
  • Non-developmental Expenditure:
    • It refers to the expenditureincurred by the governmenton essential general serviceslike expenditure on defence, administration, pensions etc.
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Which of the following is NOT the work of the legislature?

Answer (Detailed Solution Below)

Option 2 : Budgeting

The correct answer is option 2, i.e.Budgeting.

  • The budget is prepared by the Department of Economic Affairs of the Ministry of Finance.
  • The head of the committee is Finance minister, part of the executive.
  • Budget is the 'annual financial statement' which includes estimated receipts and expenditures of the Government of India.
  • Parliament controls over the executive in financial matters though -
    • control before the appropriation of grants through the enactment of the budget (Passing of Budget).
    • control after the enactment through financial committees.
  • The primary function of the legislature is to make laws.
    • It has exclusive powers to make laws. (Union list, state list and concurrent list)
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How many crores have been allocated for completion of 80 lakh houses under the PM Awas Yojana, both Rural and Urban, in 2022-23?

  1. 58,000 crore
  2. 38,000 crore
  3. 48,000crore
  4. 88,000 crore

Answer (Detailed Solution Below)

Option 3 : 48,000crore

The correct answer is48,000 crore.

[Solved] Government budgeting and Fiscal Policy MCQ [Free PDF] - Objective Question Answer for Government budgeting and Fiscal Policy Quiz - Download Now! (21)Key Points

  • Sitharaman also announced an allocation of Rs 48,000 crore for the completion of 80 lakh houses for the identified eligible beneficiaries of PM Awas Yojana, both Rural and Urban, in 2022-23.
  • The Central Government will work with the state governments for a reduction of time required for all land and construction related approvals, for promoting affordable housing for the middle class and Economically Weaker Sections in urban areas.
  • The Government will also work with the financial sector regulators to expand access to capital along with the reduction in the cost of intermediation.
  • An allocation of Rs 60,000 crore has also been made to cover 3.8 crore households in 2022-23 under Har Ghar, Nal Se Jal Scheme

[Solved] Government budgeting and Fiscal Policy MCQ [Free PDF] - Objective Question Answer for Government budgeting and Fiscal Policy Quiz - Download Now! (22)Additional Information

Pradhan Mantri Awas Yojana (Urban)-PMAY (U)

  • Pradhan Mantri Awas Yojana (Urban) Mission launched on 25th June 2015 which intends to provide housing for all in urban areas by the year 2022.
  • The Mission provides Central Assistance to the implementing agencies through States/Union Territories (UTs) and Central Nodal Agencies (CNAs) for providing houses to all eligible families/ beneficiaries against the validated demand for houses for about 1.12 cr.

Pradhan Mantri Awas Yojana - Gramin (PMAY-G)

  • The public housing program in the country started with therehabilitation of refugees immediately after independence and sincethen, it has been a major focus area of the Government as an instrumentof poverty alleviation.
  • To address these gaps in the rural housing program and in viewGovernment’s commitment to providing “Housing for All” by 2022, thescheme of IAY has been re-structured into Pradhan Mantri AwaasYojana – Gramin (PMAY-G) w.e.f 1st April 2016
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The merger of the Railways Budget with the General Budget took place in ______ .

  1. Budget 2017-18
  2. Budget 2016-17
  3. Budget 2015-16
  4. Budget 2018-19

Answer (Detailed Solution Below)

Option 1 : Budget 2017-18

The correct answer isBudget 2017-18.

[Solved] Government budgeting and Fiscal Policy MCQ [Free PDF] - Objective Question Answer for Government budgeting and Fiscal Policy Quiz - Download Now! (23)Key Points

(Video) Indian Economy MCQs | FISCAL POLICY 2021 | UPSC Prelims 2021 | UPSC Articulate Arpit Sharma

  • The government of India approved the merger of the Railway Budget with the General Budget onSeptember 21. 2016.
  • On February 1, 2017, the first combined budgetwas presented in parliament.
  • The practice of aseparate budget for Railways was started in 1924.
  • It was done on therecommendations of the Acworth Committee.
  • At that time therailway budget constituted around 84% of the total budgetand therefore it was recommended to separate it from the general budget.
  • But with time budget of other ministries also started increasing and some of themeven overtook the budget of Railways.
  • In 2016 the railway budget shrank to almost 15% of the total budgetand hence the idea to merge it with the general budget was proposed by the Union government in 2016.

[Solved] Government budgeting and Fiscal Policy MCQ [Free PDF] - Objective Question Answer for Government budgeting and Fiscal Policy Quiz - Download Now! (24)Additional Information

  • About Budget:
    • ​In our Constitution, the term'budget' finds no mention.
    • The term'Annual Financial Statement'refers to the budget andarticle 112 dealswith provisions related to it.
    • The budget isprepared by the Department of Economic Affairs, Ministry of Finance
    • Finance Minister presents the budget in the Lok Sabha.
    • The budget ispresented on February 1.
    • But before 2017, it used to be presented on the last day of February.
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Development expenditure of the Central Government does not include

  1. defence expenditure.
  2. expenditure on economic services.
  3. expenditure on social and community services.
  4. grant to states.

Answer (Detailed Solution Below)

Option 1 : defence expenditure.

The correct answer is defence expenditure.

[Solved] Government budgeting and Fiscal Policy MCQ [Free PDF] - Objective Question Answer for Government budgeting and Fiscal Policy Quiz - Download Now! (25)Key Points

  • Expenditure on economic service, expenditure on social and community services, grant to states are examples of developmental expenditures.
  • Development expenditure is the money spent by the government on developmental and welfare programmes.

[Solved] Government budgeting and Fiscal Policy MCQ [Free PDF] - Objective Question Answer for Government budgeting and Fiscal Policy Quiz - Download Now! (26)Important Points

  • Defence Expenditure is a part of Non-Plan Expenditure.
  • Non-Plan Expenditure constitutes the biggest proportion of the government’s total expenditure.
  • The biggest items of Non-Plan Expenditure are interest payments and debt servicing, defence expenditure and subsidies.
  • For defence services, both revenue and capital expenditure are incurred.
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Which was the highest allocation Ministry in Budget 2021-22?

  1. Ministry of Defence
  2. Ministry of Education
  3. Ministry of Railway
  4. Ministry of Health and Family Welfare

Answer (Detailed Solution Below)

Option 1 : Ministry of Defence

The correct answer isMinistry of Defence.

[Solved] Government budgeting and Fiscal Policy MCQ [Free PDF] - Objective Question Answer for Government budgeting and Fiscal Policy Quiz - Download Now! (27)Key Points

  • The Budget 2021 was presented by Nirmala Sitharaman, Union Finance Minister.
  • The Budget laid importance on six pillars -
    • Health and Wellbeing
    • Physical & Financial Capital, and Infrastructure
    • Inclusive Development for Aspirational India
    • Reinvigorating Human Capital
    • Innovation and R&D
    • Minimum Government and Maximum Governance.
  • The Defence sector continued to receive a major (14%)share of the Centre's budgetary expenditure to ministries.
  • The Defence Ministry received Rs 4,78,195.62 crore in allocation for the financial year 2021-22.
  • It is the highest allocation in the budget.
  • It wasan increase of 18.75%over 2020-21 and 30.62%over 2019-20.
  • This is the highest ever increase in the last 15 years.
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Fiscal policy creates a surplus, when the total _______.

  1. Expenditure and total receipts same
  2. receipts more than expenditure
  3. expenditure over receipts
  4. Receipts and total expenditure very low

Answer (Detailed Solution Below)

Option 2 : receipts more than expenditure

The correct answer isreceipts more than expenditure.

[Solved] Government budgeting and Fiscal Policy MCQ [Free PDF] - Objective Question Answer for Government budgeting and Fiscal Policy Quiz - Download Now! (28)Key Points

  • Fiscal policy refers to the use of government spending and tax policies to influence economic conditions, especially macroeconomic conditions, including aggregate demand for goods and services, employment, inflation, and economic growth.
  • A budget surplus occurs when receipts exceed expenditures.
  • The term often refers to a government's financial state, as individuals have "savings" rather than a "budget surplus".
  • A surplus is an indication that a government's finances are being effectively managed.
  • A surplus implies the government has extra funds.
  • Advantages of a budget surplus:
    • These funds can be allocated toward public debt, which reduces interest rates and helps the economy.
    • A budget surplus can be used to reduce taxes, start new programs, or fund existing programs such as Social Security or Medicare.
    • The government might use a budget surplus to cut taxes to stimulate the supply-side of the economy
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As per Union Budget 2021-22, Fiscal deficit is estimated at ______ per cent of GDP in 2021- 22.

  1. 5.1
  2. 7.6
  3. 6.8
  4. 7.2

Answer (Detailed Solution Below)

Option 3 : 6.8

The correct answer is 6.8.

  • As per Union Budget 2021-22, the Fiscal deficit is estimated at 6.8 percent of GDP in 2021- 22.
  • The fiscal deficit is targeted at 6.8% of GDP in 2021-22, down from the revised estimate of 9.5% in 2020-21 (4.6% in 2019-20).
  • The government aims to steadily reduce the fiscal deficit to 4.5% of GDP by 2025-26.
  • The difference between total revenue and total expenditure of the government is termed a fiscal deficit. It is an indication of the total borrowings needed by the government. While calculating the total revenue, borrowings are not included.

[Solved] Government budgeting and Fiscal Policy MCQ [Free PDF] - Objective Question Answer for Government budgeting and Fiscal Policy Quiz - Download Now! (29)Additional Information

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  • The Fiscal Deficit in 2022-23 is estimated at 6.4 percent of GDP.
  • The Fiscal Deficit of the Government for 2022-23 is estimated to be Rs. 16, 61,196 crores.
  • The Revised Estimates for 2021-22 indicate a Fiscal Deficit of Rs. 15, 91,089 crores as against the Budget Estimates of Rs. 15, 06,812 crores.

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