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Test: Government Budget And Economy - 2


20 Questions MCQ Test Economy and Indian Economy (Prelims) by Shahid Ali | Test: Government Budget And Economy - 2


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QUESTION: 1

One of the other two components of government Revenue in the budget are

Solution:

Capital receipts accrue on realisation of assets which is nothing but source of funds. Further, when we sell any asset it is grouped under non-operating income. But, profit or loss on it would be released to the revenue account which in turn would be transferred to reserves. So, we are unlocking the value of asset i.e. economic benefit on such asset is actually realized. Economic benefit means 'Increase in revenue or decrease in operating cost' which is nothing but revenue in nature. So, it is also the component of government revenue.

QUESTION: 2

One of the two components of government expenditure in the budget are

Solution:

A revenue expenditure is an amount that is expensed immediately—thereby being matched with revenues of the current accounting period. Routine repairs are revenue expenditures because they are charged directly to an account such as Repairs and Maintenance Expense.

QUESTION: 3

One of the other two components of government expenditure in the budget are

Solution:

Capital expenditure or capital expense is the money a company spends to buy, maintain, or improve its fixed assets, such as buildings, vehicles, equipment, or land.

QUESTION: 4

The major source of Revenue receipts for the government is
Solution:
QUESTION: 5

Direct tax is a tax whose
Solution:
QUESTION: 6

Direct tax is a tax which is imposed on
Solution:
QUESTION: 7

An example of a direct tax is
Solution:
QUESTION: 8

The major source of Revenue receipts for the government is not
Solution:
QUESTION: 9

Indirect tax is a tax whose
Solution:

An indirect tax is a tax collected by an intermediary from the person who bears the ultimate economic burden of the tax. The intermediary later files a tax return and forwards the tax proceeds to government with the return.

QUESTION: 10

The policies useful to reduce inequalities of income are the
Solution:
QUESTION: 11

Budgetary policies relate to
Solution:
QUESTION: 12

Budgetary policies are implemented by the
Solution:
QUESTION: 13

Revenue Receipts
Solution:
QUESTION: 14

Capital Receipts
Solution:
QUESTION: 15

Disinvestment is a
Solution:
QUESTION: 16

Loan by govt.
Solution:

Capital receipts are a non-recurring incoming cash flow into your business, which leads to the creation of a liability (a debt to be paid in the future) and a decrease in company assets (resources that lead to capital gain)

QUESTION: 17

Revenue Expenditure
Solution:
QUESTION: 18

Capital Expenditure
Solution:
QUESTION: 19

transfer payment is a
Solution:

Transfer payment. In economics, a transfer payment (or government transfer or simply transfer) is a redistribution of income and wealth (payment) made without goods or services being received in return. These payments are considered to be non-exhaustive because they do not directly absorb resources or create output.

QUESTION: 20

Repayment of loan by the govt.
Solution:

Repayment of loan is also capital expenditure because it reduces liability. These expenditures are met out of capital receipts of the government including capital transfers from rest of the world.

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