Budget Related Questions and Answers pdf

Multiple choice questions of Subject Commerce MCQs Topic Budget Related Questions and Answers pdf ( Budget Related Questions and Answers pdf Quiz ) for Entrances (Entrance Exam) Conducted by different Central and State Universities are given below.

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Budget Related Questions and Answers pdf | MCQ on Government Budget class

2. Which one of the following taxes is levied by the central but wholly assigned to the statest

(a) Personal income tax

(b) Excise on drugs and narcotic

(c) Railway passenger tax

(d) Gift tax

Ans. c

3. All the revenues received, loans raised and money received in repayment of loans by the Union Government go into

(a) Consolidated Fund of india

(b) Contingency Fund of India

(c) Public Account of India

(d) Prime Minister’s Relief Fund

Ans. a

4. Given a proportional income tax and a balanced budget, an autonomous increase in investment will increase the level of equilibrium income and the budget will

(a) still be in balance

(b) have a surplus

(d) the outcomne is uncertain

(c) have a deficit

Ans. a

5. The merit of zero based budgeting is that

(a) tax liability is reduced

(b) profits go up

(c) deficit financing becomes zero

(d) expenditure is rationalised

Ans. d

6. In India, constitutional requirement, according to.

(a) Article 112 preparing government budget is a

(b) Article 110

(d) Article 102

(c) Article 115

Ans. a

7. In the Indian context, deficit financing means

(a) an excess of goverriment’s revenue over expenditure

(b) an excess of government’s current expenditure over its current revenue

(c) an excess of government’s total expenditure over its total revenue

(d) None of the above

Ans. c

8. Indirect taxes are objectionable because they

(a) are hard to collect

(b) are regressive

(c) do not raise enough revenue

(d) are particularly hard on the rich

Ans. b

9. Arrange the following reports in chronological order.

1. Direct taxes enquiry committee’s final report.

2. Final report on rationalising and simplification of the tax structure,

3. Indian tax reforms report of a survey.

4. Taxation enquiry commission.

Codes (a) 4 321

(c) 3 142

(b) 1 234

(d) 2 314

Ans. a

10. When the rate of tax goes up with increase in income, it is c oft called

(a) proportional tax

(c) progressive tax

(b) regressive tax

(d) presumptive tax

Ans. c

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MCQ on Government Budget class 12

11. State the order of the appointment of the following as chairman of finance commission.

1. RC Neogy

2. R Brahamanand Reddy

3. NKP Salve

4. AK Chanda


(a) 1324

(c) 1342

(b) 1 423

(d) 124 3

Ans. b

12. Loans of public enterprises are a part of

(a) capital expenditure

(c) Both ‘a’ and ‘b’

(b) revenue expenditure

(d) None of these

Ans. a

13. By tradition, the budget in India is presented on the last working day of

(a) February

(c) December

(b) March

(d) January

Ans. a

14. The main objectives of fiscal policy in developing countries are

1. rapid economic growth

3. full employment

2. price stability

4. equitable distribution

Which of the statements given above are correct?

(a) 1 and 2

(b) 2 and 3

(c) 2 and 4

(d) 1 and 4

Ans. c

15. The concept of Zero Based Budget (ZBB) was given by

(a) RA Musgrave

(c) Peter A Pyhr

(b) JM Keynes

(d) AH Hansen

Ans. c

16. Public goods possess the distinct features of being

(a) non-excludable

(c) Both ‘a’ and ‘b’

(b) non-rivalrous

(d) Neither ‘a’ nor ‘b’

Ans. c

17. Which one of the following is not an objective of fiscal policy?

(a) Economic growth

(b) Economic stability

(c) Maximisation of employment level

(d) Regulation of financial institutions

Ans. d

18. Profits and dividends of LIC are examples of

(a) tax revenue

(b) non-tax revenue

(c) capital receipts

(d) None of the above

Ans. b

19. All taxes come under

(a) capital receipts

(c) public debt

(b) revenue receipts

(d) public expenditure

Ans. b

20. Expenditure on ‘general services’ is

(a) revenue expenditure

(b) capital expenditure

(c) plan expenditure

(d) None of these

Ans. a

Budget Quiz

21. A budgetary deficit means that

(a) total expenditure is more than total revenue

(b) current expenditure is more than current revenue

(c) capital expenditure is more than capital revenue

(d) total expenditure is more than current revenue

Ans. a

22. If external debt of a country rises faster than its interest obligations, then it is a case of

(a) liquidity trap

(c) poverty trap

(b) debt trap

(d) export led growth

Ans. b

23. Priority sector does not include

(a) export

(b) trade

(d) agriculture

(c) import

Ans. b

24. The implication(s) of fiscal deficit is/are

(a) it creates a ‘debt trap

(b) it increases dependence on foreign countries

(c) it leads to inflation in the country

(d) All of the above

Ans. d

25. Which of the following taxes is levied by the State Government only?

(a) Entertainment tax

(b) Wealth tax

(c) Income tax

(d) Corporation tax

Ans. a

26. Fiscal and monetary policies are intended to combe

(a) structural unemployment

(b) frictional unemployment

(c) cyclical unemployment

(d) Both ‘a’ and ‘c

Ans. d

27. Fiscal deficit in the union budget means

(a) the sum of budgetary deficit and net increase in internal and external borrowings

(b) the difference between current expenditure and current revenue

(c) the sum of monetised deficit and budgetary deficit

(d) the net increase in government’s borrowings from the RBI

Ans. a

28. Groups lobbying government for tariffs on foreign products to limit foreign competition is an example of

(a) how the medium-voter-model work

(b) how political choices bundied

(c) rent seeking behaviour

(d) the paradox of voting

Ans. c

29. Stagflation means

(a) infiation with recession

(b) recession and stagnation

(c) infiation galloping like a stag

(d) infiation and increasing output

Ans.  a

30. The relationship between tax collections and tax rates has been expressed by

b) Engel’s law

(d) indifference curve

(a) Lorenz cunrve

(c) Latfer curve

Ans. c

Government Budget and the Economy class 12 MCQ

31. The tax that is being proposed to replace the sales tax is called the

(e) goods and services tax

(c) value added tax

(b) progressive income tax

(d) harmonised federal tax

Ans. a

32. If the original budget does not go as expected because of some natural or economic calamity, then the government may present a .. to deal with these setbacks.

(a) vote on account

(b) supplementary budget

(d) zero based budget

(C) performance budget

Ans. b

33. The unbalanced growth model was first propounded by

1. Albert O Hirschman

2. HS Singer and Raul Prebisch

3. Kindelberger and Ragnar Nuskse

4. WW Rostow and Paul Streeten

Which of the statements given above is/are correct?

(a 1 and 2

ic) 1 and 4

b) 1 and 3

(a) Only 1

Ans. a

34. The basis of corporate tax is

(a) total turnover of the company

b) profit aher distribution of dividend

C) profit before distribution of dividend

d) capital employed in the company

Ans. c

36. Disinvestment is a source of

(a) revenue receipt

(b) capital receipt

(c) revenue expenditure

(d) capital expenditure

Ans. b

37. The principle(s) of a good tax system is/are

(b) efficiency

(a) equity

(c) simplicity

(d) All of these

Ans. d

38. Octroi is levied and collected by

(a) Central Government

(c) local bodies

(b) State Government

(d) All of these

Ans. c

39. Salary paid to government employees is an example of

(a) planned revenue expenditure

(b) unplanned revenue expenditure

(c) developmental expenditure

(d) None of the above

Ans. a

40. The principle of maximum social advantage is concerned with

(a) taxation

(b) expenditure

(c) public debt

(d) Both taxation and public expenditure

Ans. d

41. The main sources of revenue of the Union Government in ascending order of importance are

I. income tax

2. corporate tax

4. excise duties

3. custom duties

Codes (a) 3 2 4 1

(c) 2 1 3 4

(b) 2 4 3 1

(d) 1 2 3 4

Ans. d

42. Productivity of Indian agriculture should be enhanced by

1. increased public investment

2. increased irrigation facilities

3. higher support price to the farmers

4. shifting workers from industry to agriculture

Which of the statements given above are correct?

(a) 1, 2 and 4

(c) 2, 3 and 4

(b) 1, 2 and 3

(d) 3, 4 and 1

Ans. b

43. Ad-velorem means

(a) according to value

(b) according to weight

(c) according to size according to advertisement costs

Ans. a

44. The government budget affects

(a) production

(b) economic growth

(C) economic stability

(d) All of the above

Ans. d

45. Which one of the following is not an objective of fiscal policy?

(a) Economic growth

(b) Price stability

(c) Maximisation of ermployment level

(d) Regulating of financial institutions

Ans. d

46. Parks and street lights are examples of

(a) public goods

(c) consumption goods

(b) private goods

(d) None of these

Ans. a

47. Budgetary deficit does not take into account

(a) revenue deficit

(b) capital budget deficit

(c) balance of payment deficit

(d) interest payments on public debt

Ans. c

48. Which of the following does not help to broaden the tax base?

(a) MAT

(b) VAT

(c) Zero based budgeting

(d) Tax on agricultural income

Ans. c

49. The tax which is not shared by states is

(a) sales tax

(c) corporation táx

(b) income tax

(d) central excise duty

Ans. c

50. The difference between total public revenue and total public expenditure in a particular year is termed as

(a) primary deficit

(c) budgetary deficit

(b) revenue deficit

(d) fiscal deficit

Ans. b

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51. Which of the following is not a part of fiscal policy?

(a) Subsidy under the public distribution system

(b) Control of population

(c) Imposition of taxation

(d) Issue of bonds by the government

Ans. b

52. Agricultural income tax is a source of revenue to

(a) Central Govermment

(b) State Government

(c) Local Administration

(d) Central and State Government

Ans. b

53. Cannon of equity in taxation is generally considered to be satisfied by

(a) proportional taxation

(c) regressive taxation

(b) progressive taxation

(d) lumpsum tax

Ans. b

54. The revenues of the State Government are raised from the following sources except one, what is that?

(a) Land revenue

(b) Agricultural income tax

(c) Entertainment tax

(d) Expenditure tax

Ans. d

55. Fiscal policy in a developing country like India aims at Sk. Fiscal policy in a developing country like India aims at

(a) widening the tax base

b) mopping up mast of the surpluses through taxntion

c) Unchieving socio-economic objectives of the state

(d) All of the above

Ans. d

56. Concepts of displacement and concentration effect in public expenditure are attributed to

1. AC Pigou and JK Mehta

2. Alan T Peacock and Jack Wiseman

1. Kenneth Arrow and Paul A Samuelson

4. AR Prest and IMD Little

Which of the statements given above is/are correct?

(a) 1 and 2

(e) 1,2 and 3

(b) Only 2

(d) All of these

Ans. b

57. Agricultural income tax is

(a) levied and appropriated by the respective states

(b) levied and collected by the union but given over to the respective states

(c) levied by the union but collected and appropriated by the respective states

(d) None of the above

Ans. a

58. Justice in taxation is best ensured by applying the principle of

(a) equal absolute sacritice

(b) equal proportional sacrifice

(c) equal marginal sacritice

(d) quid pro quo

Ans. c

59. “Social equity means social justice”. The given statement is

(b) false

(d) partly false

(a) true

(c) partly true

Ans. a

60. Provision of social goods possess problem because

(a) such goods tend to be non-rivalrous in consumption

(b) consumption preferences with respect to such goods are not revealed

(c) market mechanism is not well suited for the provision of such goods

(d) All of the above

Ans. d

61. … tax rate is one in which the rate of progression in taxation does not increase in the same proportion as increase in income.

(a) Progressive

(b) Regressive

(c) Proportional

(d) Degressive

Ans. d

62. The imposition of a selective sales tax will raise the price of the taxed product by equal amount if it is produced under

(a) constant cost

(b) increasing cost

(c) decreasing cost

(d) impertect competition

Ans. a

63. Which one of the following sources is not considered a source of government revenue?

(a) Taxes

(b) Surplus of public enterprises

(c) Transfer payments

(d) Mobilisation of internal loans and deposits

Ans. c

64. Tobin tax is a tax in

(a) exports

(b) imports

(c) transactions in foreign exchange

(d) sales

Ans. c

65. Which of the following concepts of budget deficit has become practically redundant in India?

(a) Fiscal deficit

(c) Primary deficit

(b) Budgetary deficit

(d) Revenue deficit

Ans. b

66. India’s fiscal policy since independence, has centered around

(a) more borrowings

(c) deficit financing

(b) higher taxation

(d) All of these

Ans. c

67. The tax multiplier is generally

(a) greater than the government expenditure multiplier

(b) equal to the government expenditure multiplier

(c) less than the government expenditure multiplier

(d) equal to the investment multiplier

Ans. c

68. Central assistance for state and UT plan is a part of

(a) plan expenditure

(b) non-plan expenditure

(c) revenue expenditure

(d) None of the above

Ans. a

69. The MODVAT scheme of taxation benefits

(a) those manufacturers who import component

(b) those manufacturers who depend on indigenous material

(c) it is neutral between the above two

(d) those manufacturers who are importing technology

Ans. b

70. The whole burden of a tax will be borne by the sellers, if

(a) the demand for a commodity is inelastic and supply is perfectly elastic

(b) the elasticity of demand for a commodity is same as the elasticity of supply of the commodity

(c) the demand for a commodity is perfectly elastic and supply is inelastic

(d) the elasticity of demand for a commodity is less than the elasticity of supply of that commodity

Ans. a

71. Which of the following come under non-plan expenditure

1. Subsidies

2. Interest payments

3. Defence expenditure

4. Maintenance expenditure for the infrastructure created during previous plan periods

Select the correct answer using the codes given below.

(a) 1 and 2

(c) 2 and 4

(b) 1 and 3

(d) All of these

Ans. d

72. High tax leads to .. in disposable income.

(a) decline

(c) no effect

(b) an increase

(d) None of these

Ans. a

73. Indicate the sequence of the following in terms of their implementation.

1. Income tax

3. Value added tax

2. Expenditure tax

4. Fringe benefit tax Codes

(a) 1324

(c) 2341

(b) 1234

(d) 3.4 12

Ans. b

74. Which tax is the most difficult to shift to others?

(b) Corporate income tax

(a) Personal income tax

(c) specific excise tax

(d) Business property tax

Ans. a

75. . is a compulsory payment made to the government for availing its services.

(b) Fee

(d) None of these

(a) Tax

(c) Fine

Ans. b

76. . tax is one which is levied on a commodity on the basis of its units, weights, size, etc.

(a) Ad-velorem

(c) Specific

(b) Unit

(d) VAT

Ans. c

77. Food and fertiliser subsidies are included in

(a) capital expernditure

(b) revenue expenditure

(c) plan expenditure

(d) All of the above

Ans. b

78. With a regressive tax, as income

(a) increases, tax rate remains the same

(b) decreases, the tax rate decreases

(c) increases, the tax rate increases

(d) increases, the tax rate decreases

Ans. d

79. … is a source of revenue for a government and is collected from those who don’t follow certain laws and orders.

(a) Fees

(c) Fine and penalty

(b) Tax

(d) Licence fee

Ans. c

80. The efficiency loss of tax is

(a) greater, the greater is the elasticity of supply and demand

(b) greater, the less is the elasticity of supply and demand

(c) less, the greater is the elasticity of supply and demand

(d) not affected by the elasticity of supply and demand

Ans. a

81. Tax incidence refers to

(a) whether a tax is progressive, proportional or regressive

(b) how often a tax is collected

(c) the person or group who ends up paying a tax

(d) how a tax is collected

Ans. c

82. In India, the concept of .. budget was introduced in 1973-74.

(a) vote on account

(b) supplementary

(c) performance

(d) zero based

Ans. c

83. In India, zero based budgeting was first initiated in the year . in the formulation of budgets of all the Central Government departments.

(a) 1987-88

(c) 1995-96

(b) 1990-91

(d) 2000-01

Ans. a

84. Interest payment is an item of

(a) revenue expenditure

(c) plan expenditure

(b) capital expenditure

(d) None of these

Ans. a

85. indicates borrowing requirements of the .. government to meet its interest commitments.

(b) Revenue deficit

(d) None of these

(a) Fiscal deficit

(c) Primary deficit

Ans. c

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