Budgetary procedure - types of budget, deficit financing and methods, role and objectives of budgetary policy, budgetary trends in India since independence, objectives and instruments of fiscal policy, fiscal policy in India - Question Bank

1. The concept of 'fiscal federalism' in India pertains to:
A) The relationship between the central bank and commercial banks
B) The division of financial powers and responsibilities between the Union and State governments
C) The regulation of international trade
D) The management of foreign exchange reserves
2. A 'supplementary budget' is presented when:
A) The financial year is about to end
B) Additional funds are required beyond the original budget
C) The government plans to reduce its expenditure
D) The budget is presented for the first time
3. The 'expenditure on subsidies' in India's budget is primarily aimed at:
A) Increasing government revenue
B) Reducing income inequality and supporting vulnerable sections
C) Reducing the fiscal deficit
D) Encouraging private investment
4. What is the primary role of the Ministry of Finance in the budgetary procedure?
A) To conduct the monetary policy
B) To prepare and present the Union Budget
C) To audit government accounts
D) To regulate stock markets
5. Which committee in India recommended the introduction of the FRBM Act?
A) Kelkar Committee
B) N. K. Singh Committee
C) Chidambaram Committee
D) Rangarajan Committee
6. The 'balanced budget multiplier' states that an equal increase in government spending and taxes will:
A) Decrease GDP
B) Increase GDP by the same amount
C) Have no effect on GDP
D) Increase GDP by less than the increase in spending
7. Which of the following best describes the 'crowding out' effect in economics?
A) Increased government spending leads to increased private investment
B) Increased government borrowing leads to higher interest rates and reduced private investment
C) Increased taxes reduce consumer spending
D) Reduced government spending stimulates economic activity
8. The 'Gini coefficient' is often used to measure:
A) Inflation rate
B) Income inequality
C) Unemployment rate
D) Economic growth
9. What is the primary goal of 'fiscal consolidation'?
A) Increasing government debt
B) Reducing the fiscal deficit and public debt
C) Increasing government spending
D) Lowering taxes significantly
10. The process of 'budgetary procedure' includes:
A) Only the presentation of the budget
B) Preparation, presentation, and implementation of the budget
C) Only the voting on budget demands
D) Only the audit of government expenditure
11. Which of the following is a non-tax revenue for the Indian government?
A) Corporate tax
B) Goods and Services Tax (GST)
C) Profits from public sector undertakings
D) Customs duty
12. The 'Contingency Fund' of India is used for:
A) Financing planned development expenditure
B) Meeting unforeseen expenditure for which Parliament has not voted
C) Paying interest on government debt
D) Funding recurring revenue expenditure
13. The 'Consolidated Fund' of India contains:
A) All public money received by the Government of India
B) Only tax revenues of the central government
C) Money belonging to the public held in trust by the government
D) Funds borrowed by the government
14. The 'Public Account' of India consists of funds which:
A) Belong to the government and require parliamentary approval for spending
B) Do not belong to the government and are held in trust
C) Are generated from tax revenues
D) Are used for defence spending
15. What is the term for the budget presented when the Lok Sabha is dissolved?
A) Interim budget
B) Final budget
C) Supplementary budget
D) Revised budget
16. In India, the budget is presented to Parliament on:
A) The last day of the financial year
B) The first day of the financial year
C) Such date as the President may fix
D) The first Monday of August
17. The 'Monetization of Deficit' refers to:
A) Financing the government deficit by printing money
B) Financing the deficit by issuing bonds
C) Reducing the deficit through tax hikes
D) Reducing the deficit through spending cuts
18. During periods of high inflation, a government is likely to adopt a fiscal policy that:
A) Increases government spending and reduces taxes
B) Reduces government spending and increases taxes
C) Maintains current levels of spending and taxation
D) Increases borrowing to fund more spending
19. Which article of the Indian Constitution deals with the Finance Commission?
A) Article 280
B) Article 112
C) Article 300
D) Article 143
20. What is the role of the Finance Commission in India concerning the budget?
A) To prepare the Union Budget annually
B) To recommend the distribution of tax revenues between the Union and States
C) To manage the country's monetary policy
D) To approve all government expenditure proposals
21. The 'automatic stabilizers' in fiscal policy are features that:
A) Require specific legislative action to activate
B) Automatically counteract economic fluctuations
C) Increase government spending during booms
D) Decrease taxes during recessions
22. What does 'discretionary fiscal policy' entail?
A) Automatic stabilizers like unemployment benefits
B) Government actions taken to influence aggregate demand
C) Policies that operate without specific government intervention
D) Rules that limit government spending
23. The concept of 'development expenditure' in India's budget refers to:
A) Expenditure on defence
B) Expenditure on subsidies
C) Expenditure on infrastructure, education, and health
D) Expenditure on debt servicing
24. Which of the following is NOT a direct objective of fiscal policy in India?
A) Promoting economic growth
B) Controlling inflation
C) Managing the exchange rate
D) Reducing income inequality
25. In the context of Indian budgets, 'Vote on Account' is a provision that allows:
A) The government to spend beyond its budgeted amount
B) The Parliament to approve the budget before the fiscal year begins
C) The government to withdraw funds from the Contingency Fund
D) The Lok Sabha to vote on specific expenditure proposals
26. What was a significant budgetary trend in India immediately after independence?
A) Focus on deficit financing for rapid industrialization
B) Emphasis on balanced budgets and fiscal austerity
C) Significant reduction in government expenditure
D) Privatization of major industries
27. The FRBM Act mandates that the fiscal deficit should not exceed:
A) 5% of GDP
B) 3% of GDP
C) 10% of GDP
D) 1% of GDP
28. The FRBM Act (Fiscal Responsibility and Budget Management Act) in India aims to:
A) Increase the fiscal deficit to stimulate the economy
B) Reduce the fiscal deficit and improve fiscal discipline
C) Eliminate all government borrowing
D) Increase revenue expenditure
29. Which of the following is a component of 'Capital Expenditure'?
A) Salaries of government employees
B) Subsidies
C) Expenditure on creation of assets
D) Interest payments
30. Which of the following is a component of 'Revenue Expenditure'?
A) Expenditure on building roads
B) Loans given to state governments
C) Interest payments on debt
D) Acquisition of machinery
31. Which of the following is a component of 'Capital Receipts'?
A) Interest receipts
B) Dividends from public sector undertakings
C) Disinvestment proceeds
D) Customs duty
32. Which of the following is a component of 'Revenue Receipts'?
A) Disinvestment proceeds
B) Loans from international bodies
C) Income tax
D) Recovery of loans
33. What is the 'Primary Deficit'?
A) Fiscal Deficit minus interest payments
B) Revenue Deficit plus capital expenditure
C) Total government expenditure minus total revenue
D) Government borrowing minus fiscal deficit
34. The 'Fiscal Deficit' represents:
A) The difference between government's total revenue and total expenditure
B) The difference between government's revenue receipts and revenue expenditure
C) The total borrowing of the government
D) The difference between government's total expenditure and its non-debt creating capital receipts
35. What is the 'Revenue Deficit' in a budget?
A) When capital receipts exceed capital expenditure
B) When government's total expenditure exceeds its total revenue receipts
C) When government's revenue expenditure exceeds its revenue receipts
D) When fiscal deficit is zero
36. The primary objective of fiscal policy in India is to:
A) Ensure price stability and equitable distribution of income
B) Maximize foreign direct investment
C) Control the exchange rate
D) Reduce the trade deficit
37. A contractionary fiscal policy aims to:
A) Stimulate aggregate demand
B) Reduce aggregate demand
C) Increase government borrowing
D) Lower interest rates
38. An expansionary fiscal policy typically involves:
A) Increasing taxes and decreasing government spending
B) Decreasing taxes and increasing government spending
C) Increasing taxes and increasing government spending
D) Decreasing taxes and decreasing government spending
39. Which of the following is an instrument of fiscal policy?
A) Bank rate
B) Cash Reserve Ratio (CRR)
C) Government borrowing
D) Open Market Operations (OMO)
40. Fiscal policy refers to the government's use of:
A) Interest rates and money supply
B) Taxation and government spending
C) Exchange rates and trade policies
D) Regulation of monopolies and competition
41. What is the constitutional provision related to the presentation of the Union Budget in India?
A) Article 112
B) Article 280
C) Article 300A
D) Article 14
42. The 'Budget Speech' in India is typically presented by:
A) The Prime Minister
B) The Finance Minister
C) The Governor of the Reserve Bank of India
D) The Chief Economic Advisor
43. Which of the following is a key objective of India's budgetary policy?
A) To promote economic growth and stability
B) To solely increase tax collection
C) To reduce the size of the government
D) To maintain a constant level of public debt
44. A 'Performance Budget' focuses on:
A) The total amount of money spent
B) The physical and financial targets of government programs
C) Reducing the national debt
D) Balancing revenue and expenditure
45. The 'Zero-Based Budgeting' (ZBB) approach requires:
A) All previous budget allocations to be carried forward automatically
B) Every expenditure to be justified and approved anew each budget cycle
C) Only capital expenditures to be reviewed annually
D) Government revenue to exceed expenditure every year
46. Which of the following is a common method of deficit financing?
A) Issuing government bonds
B) Increasing corporate taxes
C) Reducing import tariffs
D) Privatizing public sector undertakings
47. What does 'deficit financing' primarily involve?
A) Increasing taxes to match expenditure
B) Borrowing or printing money to cover a budget deficit
C) Reducing government spending to zero
D) Selling government assets to balance the budget
48. A budget where government expenditure exceeds government revenue is known as a:
A) Balanced budget
B) Surplus budget
C) Deficit budget
D) Performance budget
49. Which type of budget aims to balance government revenue with expenditure?
A) Deficit budget
B) Surplus budget
C) Balanced budget
D) Zero-based budget
50. What is the primary objective of a budget in public finance?
A) To maximize government revenue
B) To allocate resources and achieve socio-economic objectives
C) To reduce the national debt
D) To control inflation through monetary policy
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