Indian Government Budget Quiz

A government budget shows a primary deficit of Rs. 6,900 crore. The revenue expenditure on interest payment is Rs.400crore. How much is the fiscal deficit?

Which of the following are the capital expenditure of the government?

• Payment of Interest

• Purchase of a building

• Purchase of machinery

• Loans granted to a state government

The multiplier effect refers to:

• The effect of government spending on increasing GDP

• The effect of an increase in interest rates on investment

• The impact of inflation on consumer purchasing power

• The effect of a decrease in imports on the trade balance

Tax that is imposed on value added at the various stages of production is known as :

• corporate profit tax

• direct personal tax

• value added tax

• none of these

The term "crowding out" refers to:

• The displacement of private investment by government borrowing

• The increase in consumer spending due to government stimulus

• The decrease in government spending during a recession

• The effect of fiscal policy on aggregate demand

Primary deficit in a government budget equals:

• interest payments

• interest payments less borrowings

• borrowings less interest payments

• none of the above

Which of the following is true about expansionary fiscal policy?

• It aims to reduce inflation

• It aims to increase government revenue

• It involves decreasing government spending

• It aims to stimulate economic growth and reduce unemployment

Which of the following is not a potential consequence of a budget deficit?

• Higher inflation

• Increased government borrowing

• Lower interest rates

• Crowding out private investment

How can the gulf between the capital expenditure and capital receipts be reduced without borrowing?

• Selling its stake to private enterprise

• Government can sell its surplus land

• Increasing taxes

• Both (a) and (b)

Which of the following is a part of the revenue expenditure in the Indian Government budget?

• Interest payments

• Defence purchases

• Wage bill of the government

• All of these