Budget and basic fiscal concepts - One Line Questions
1.
What is a 'Zero-based budget'? —
A budget that starts from scratch, requiring justification for every expenditure item
2.
Which of the following is an example of an automatic stabilizer? —
Unemployment benefits
3.
What is the 'liquidity trap' in the context of fiscal policy? —
A situation where interest rates are so low that monetary policy becomes ineffective, and fiscal policy may be needed
4.
What is 'vote on account'? —
A temporary grant of money by Parliament until the budget is passed
5.
A 'balanced budget multiplier' suggests that: —
An equal increase in government spending and taxes will lead to an increase in national income
6.
Indirect taxes are those that: —
Are levied on the consumption of goods and services
7.
What does 'functional finance' advocate for? —
Using fiscal policy to achieve macroeconomic stability, regardless of budget balance
8.
Which term describes the total amount of money that a government owes to its creditors? —
National debt
9.
Direct taxes are those that: —
Are levied directly on the income or wealth of individuals and corporations
10.
Which type of expenditure involves spending on essential public services like healthcare, education, and defense? —
Revenue expenditure
11.
Which of the following is a tool of fiscal policy? —
Adjusting government spending levels
12.
Which economic school of thought strongly advocates for active use of fiscal policy to manage aggregate demand? —
Keynesian economics
13.
Which of the following is an example of an indirect tax? —
Goods and Services Tax (GST)
14.
Which of the following is a 'revenue receipt' for the government? —
Interest receipts
15.
The 'Plan expenditure' in Indian budgeting refers to: —
Expenditure on social and economic services that are part of the Five Year Plans
16.
What is 'non-plan expenditure' in the context of Indian budgeting? —
Expenditure on salaries, pensions, interest payments, and subsidies
17.
What is 'discretionary fiscal policy'? —
Fiscal policy that requires deliberate action by policymakers, like changes in tax rates or spending
18.
What are 'automatic stabilizers' in fiscal policy? —
Economic factors that automatically offset fluctuations in economic activity, such as progressive taxes and unemployment benefits
19.
A budget deficit occurs when: —
Government expenditure exceeds government revenue
20.
A regressive tax system is one where: —
Higher income earners pay a smaller percentage of their income in taxes
21.
When government revenue equals government expenditure, the budget is said to be: —
Balanced
22.
What does 'revenue receipt' in a government budget refer to? —
Income that does not create any liability for the government
23.
What does 'capital receipt' in a government budget refer to? —
Income that creates liability or reduces assets of the government
24.
Which of the following is a 'capital receipt' for the government? —
Proceeds from disinvestment
25.
What is the 'Fiscal Responsibility and Budget Management (FRBM) Act' primarily aimed at? —
Ensuring fiscal discipline and reducing the government's deficit and debt
26.
Which of the following is a measure to control inflation using fiscal policy? —
Reducing government spending and increasing taxes
27.
Expansionary fiscal policy typically involves: —
Decreasing taxes and increasing government spending
28.
What is the significance of the 'demands for grants' in the parliamentary approval of the budget? —
It is the process by which Parliament approves proposed government spending
29.
What is a 'transfer payment' in government budgeting? —
Payment made to individuals for which no goods or services are received in return, such as social security benefits
30.
Which of the following is a key component of a government budget? —
Government revenue and expenditure
31.
What does 'capital expenditure' in a government budget typically refer to? —
Spending on assets that will provide future benefits, like infrastructure
32.
What is the primary source of revenue for most governments? —
Taxes
33.
Which of the following is an example of a direct tax? —
Income tax
34.
Contractionary fiscal policy aims to: —
Reduce inflation by decreasing aggregate demand
35.
The 'Performance-based budget' emphasizes: —
The results and outcomes achieved by government programs
36.
What does 'fiscal policy' refer to? —
The government's use of spending and taxation to influence the economy
37.
What is a 'structural deficit'? —
The part of the deficit that remains even when the economy is operating at its potential output
38.
The presentation of the Union Budget in India typically occurs on: —
The last working day of February or first day of April (post-2017)
39.
What does the term 'cyclical deficit' refer to? —
The portion of the deficit that arises due to fluctuations in the business cycle
40.
In India, the Union Budget is presented annually by: —
The Minister of Finance
41.
What is the primary criticism of large and persistent budget deficits? —
They can increase the national debt, leading to higher interest payments and potentially crowding out private investment
42.
What is the main objective of imposing excise duties? —
To discourage the consumption of specific goods, often considered harmful or luxury items
43.
What is the main goal of fiscal consolidation? —
To reduce the budget deficit and national debt
44.
What is the primary purpose of a government budget? —
To outline government's financial plan and resource allocation
45.
What is the primary role of the Reserve Bank of India (RBI) in relation to the government budget? —
To manage the government's borrowing and printing of currency
46.
What is the primary objective of progressive taxation? —
To reduce the tax burden on lower-income individuals
47.
Which of the following is a common government expenditure item that is NOT a transfer payment? —
Salaries of civil servants
48.
What is a budget surplus? —
When government revenue is greater than expenditure
49.
What is the concept of 'crowding out' in economics? —
When increased government borrowing leads to higher interest rates, reducing private investment