TEST : 60 MIN TEST MARKS: 35

Government Budget - II

Q1. Primary Deficit is borrowing requirements of the government to make ______.(1)

(a) Interest Payments
(b) Other than interest payments
(c) All types of payments
(d) some specific payments

Q2. Identify which of the following is an example of non-debt capital receipt. (1)

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(a) Financial aid from MNC for victims in flood affected area.
(b) Borrowings from International Monetary Fund (IMF).
(c) Recovery of loans from State Governments.

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(d) Dividend paid by State Bank of India (SBI) to the Government.

Q3. Which of the following is a capital receipt in the Government Budget? (1)
(a) Income tax
(b) Interest receipt
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(c) Sale of shares of a Public Sector Undertaking (PSU) to X Limited (Private
Company)
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(d) Dividends from a Public Sector Undertaking (PSU)
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Q4.Read the following statements carefully and choose the correct alternative: (1)
Statement 1: Fiscal deficit is always greater than primary deficit.
Statement 2: Fiscal deficit indicates borrowing requirements of the government.
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(a) Both the statements are true.

(b) Both the statements are false.
(c) Statement 1 is false, but statement 2 is true.
(d) Statement 2 is false, but statement 1 is true.
ya

Q5.The___________includes only such transactions that affect the current income

and expenditure of the government. (1)
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(a) Budget deficit (b) Revenue deficit

(c) Fiscal deficit (d) Primary deficit
D

Q6. Which of the following is not true for revenue deficit? (1)
A revenue deficit:
(a) implies that the government is dissaving and is using up the savings of the other
sectors of the economy.
(b) means that the government will have to borrow not only to finance its investment
but also its consumption expenditure requirements.
(c) focuses on present fiscal imbalances.
 (d) leads to build up of stock of debt and interest liabilities; and forces the
government, eventually, to cut productive capital expenditure or welfare expenditure.
This would mean lower growth and adverse welfare implications.

Q7. Which of the following is not true for fiscal deficit? (1)
(a) Fiscal deficit = Total expenditure -Revenue receipts -Non debt creating capital
receipts
(b) Fiscal deficit = Net borrowing at home + Borrowing from RBI + Borrowing from
abroad
(c) Fiscal deficit = Primary deficit + Interest payments on accumulated debt

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(d) None of the above

Q8. .Zero Primary Deficit means: (1)

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(a) Fiscal Deficit is also zero
(b) No Interest Payments
(c) Government has to resort to borrowings only to meet Interest Payments
(d) No Borrowings Requirements

(a) Balanced Budget ng

Q9. In a situation of Inflation, the government should adopt: (1)
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(b) Deficit budget
(c) Surplus Budget
(d) None of these
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Q10. If an economy, the Estimated Receipts of the government during a year are
lesser than the Estimated Expenditure, the budget would be________ called budget.
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(1)
Q11. If government borrowing increases, which of the following statements will be
incorrect for the current fiscal year . (1)
(a) Primary deficit will increase
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(b) Fiscal deficit will increase

(c) Revenue deficit will decrease
(d) Government burden for future payment will increase
iv

Q12."The Government Budget of a country cannot have fiscal deficit without the
D

existence of revenue deficit,". Defend or refute the given statement. (3)

Q13.Categorize the following into revenue expenditure and capital expenditure.

Give reason. (6)
(i) Investment in shares
(ii) Subsidies
(iii) Construction of school building
(iv) Defence services expenditure
(v) Repayment of loan with interest
 (vi) Grants to state governments for creation of assets

Q 14.a) Under the Ayushmaan Bharat Scheme, the Government provides free
medicines to the economically backward section of the society . Identify and discuss
the nature of the government expenditure indicated in the given statement . (2)
b) State any two measures to reduce budget deficit . (2)

Q 15 a) What does zero primary deficit indicate ? (1)

b) State two measures to finance budget deficit . (1)

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c) As per the data presented in the Union Budget 2023-24, the total receipts of the
government other than borrowings and the total expenditure are estimated at ₹27.2 lakh
crore and ₹45 lakh crore respectively. (1)
The value of the _______ deficit would be ₹17.8 lakh crore.

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(a) revenue
(c) budgetary
(b) fiscal
(d) primary
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Q16.a) -----------deficit includes interest payment by the Government on the past loans. (1)
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(i) Fiscal deficit
(ii) Revenue deficit
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(iii) Primary deficit

Options:
(a) only (i)
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(b) only (ii)

(c) only (iii)
(d) only (i) and (ii)
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b) From the following data about a government budget calculate Primary deficit: (1)

Particulars (in Arab)

iv

(i) Revenue deficit 40

D

(ii) Non-debt creating capital receipts 190

(iii) Tax Revenue 125

(iv) Capital expenditure 220

(v) Interest payments 20

(a) ₹70 Arab

(b) ₹50 Arab
(c) ₹450 Arab
(d) 10 Arab

c).Which of the alternatives best describes the following? (1)

The receipts of the government which creates burden of repayment of loans and interest thereon
in future.
(a) Non-debt creating capital receipts
(b) Debt creating capital receipts

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(c) Fiscal deficit
(d) Both (a) and (b)
d) The government of a country recorded the following data for the fiscal year 2024: (1)

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Total Government Revenues (net of Borrowings) ₹500 crore

Total Government Expenditure (including interest payments on an ₹600 crore

accumulated debt ₹40 crore)

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Calculate the amount of Government Deficit which focuses on present fiscal imbalance.

Q17a) State whether the following statement is true or false . Support your answer with reason .
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Revenue deficit increase when government fails to recover loans forwarded to different nations .
(1)
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b) "Governments across nations are too much worried about the term fiscal deficit". Do you think
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that fiscal deficit is necessarily inflationary in nature? Support your answer with valid reasons. (3)
ya
iv
D