Budget – Multiple Choice Questions (MCQs)

1. 13. Which of the following is an example of capital expenditure?

   • A. Payment of pensions
   • B. Interest on government debt
   • C. Purchase of land and buildings
   • D. Subsidies

2. 14. What is a balanced budget?

   • A. Revenue is less than expenditure
   • B. Revenue is equal to expenditure
   • C. Revenue is greater than expenditure
   • D. There is no government borrowing

3. 15. What is a budget deficit?

   • A. Revenue is greater than expenditure
   • B. Revenue is less than expenditure
   • C. Revenue is equal to expenditure
   • D. Government has surplus funds

4. 16. What is a revenue deficit?

   • A. Excess of total expenditure over total revenue
   • B. Excess of revenue expenditure over revenue receipts
   • C. Excess of capital expenditure over capital receipts
   • D. Excess of fiscal deficit over interest payments

5. 17. What is a fiscal deficit?

   • A. Total government borrowing
   • B. Excess of total expenditure over total revenue
   • C. Excess of capital expenditure over capital receipts
   • D. Revenue deficit plus capital deficit

6. 18. What is a primary deficit?

   • A. Fiscal deficit minus interest payments
   • B. Revenue deficit minus interest payments
   • C. Capital deficit minus interest payments
   • D. Total expenditure minus total receipts

7. 19. What is a budget surplus?

   • A. Expenditure is greater than revenue
   • B. Revenue is greater than expenditure
   • C. Expenditure is equal to revenue
   • D. Government has borrowed funds

8. 20. What is fiscal policy?

   • A. Government policy regarding taxation and spending
   • B. Central bank policy regarding interest rates
   • C. Regulations on international trade
   • D. Policies related to environmental protection

9. 21. What are the objectives of fiscal policy?

   • A. To promote economic stability
   • B. To achieve full employment
   • C. To ensure equitable distribution of income and wealth
   • D. All of the above

10. 22. What is the role of the budget in economic development?

    • A. To allocate resources for development projects
    • B. To influence the level of aggregate demand
    • C. To promote savings and investment
    • D. All of the above

11. 23. What are grants-in-aid in the government budget?

    • A. Unconditional transfers to state governments
    • B. Conditional transfers to state governments for specific purposes
    • C. Loans given to state governments
    • D. Revenue collected from state governments

12. 24. What is 'Vote on Account'?

    • A. A full budget presented before elections
    • B. A special provision to allow the government to withdraw funds for essential expenditure for a limited period
    • C. A vote against the government's financial policies
    • D. A detailed statement of government accounts