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Economics: CUET Mock Test - 2


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40 Questions MCQ Test CUET Mock Test Series | Economics: CUET Mock Test - 2

Economics: CUET Mock Test - 2 for Class 12 2023 is part of CUET Mock Test Series preparation. The Economics: CUET Mock Test - 2 questions and answers have been prepared according to the Class 12 exam syllabus.The Economics: CUET Mock Test - 2 MCQs are made for Class 12 2023 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Economics: CUET Mock Test - 2 below.
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Economics: CUET Mock Test - 2 - Question 1

Budget is a statement of actual annual receipts and expenditures of the government.

Economics: CUET Mock Test - 2 - Question 2

Central Budget is presented in India on ______every year by the Finance Minister.

Detailed Solution for Economics: CUET Mock Test - 2 - Question 2

Budget is presented every year on first working day of February.

Economics: CUET Mock Test - 2 - Question 3

In India _______ type of taxes are generally of no or little significance due to their very low revenue yield to government?

Detailed Solution for Economics: CUET Mock Test - 2 - Question 3

Paper taxes are almost not available in India.

Economics: CUET Mock Test - 2 - Question 4

Production of goods which are socially harmful are discouraged by..............

Detailed Solution for Economics: CUET Mock Test - 2 - Question 4

Heavy taxes are imposed on production of those goods which are socially not desirable.

Economics: CUET Mock Test - 2 - Question 5

Surplus budget is when actual receipts exceeds estimated expenditures.

Detailed Solution for Economics: CUET Mock Test - 2 - Question 5

Surplus budget is the state where estimated receipts exceeds estimated expenditure.

Economics: CUET Mock Test - 2 - Question 6

In 2017 government of India brought an important reform in the tax system of the country by introducing GST.
Which of the following type of tax is GST?

Detailed Solution for Economics: CUET Mock Test - 2 - Question 6

GST is a type of indirect tax, as it is imposed on the production of goods and burden of this can be transferred to others.

Economics: CUET Mock Test - 2 - Question 7

Rahul dies without a legal heir. His property stands transferred to the government. The income under this head will be referred to as ‘Special assessment’.

Detailed Solution for Economics: CUET Mock Test - 2 - Question 7

It will be referred to as ‘escheat’. Special assessment is paid by those owners whose value of property has increased due to developmental activities of the government.

Economics: CUET Mock Test - 2 - Question 8

Why gift tax is considered as a paper tax?

Detailed Solution for Economics: CUET Mock Test - 2 - Question 8

Revenue from this form of tax is negligible.

Economics: CUET Mock Test - 2 - Question 9

The formula to calculate primary deficit is _______

Detailed Solution for Economics: CUET Mock Test - 2 - Question 9

Primary deficit is the excess of borrowings of current year over the interest payments of previous years.

Economics: CUET Mock Test - 2 - Question 10

Expenditure on relief of earthquake victims is

Detailed Solution for Economics: CUET Mock Test - 2 - Question 10

This kind of expenditures arises all of a sudden.

Economics: CUET Mock Test - 2 - Question 11

Choose the incorrect statement from given below

Detailed Solution for Economics: CUET Mock Test - 2 - Question 11

Government budget is prepared for upcoming fiscal year.

Economics: CUET Mock Test - 2 - Question 12

Dis-investment by the government refers to

Detailed Solution for Economics: CUET Mock Test - 2 - Question 12

Dis -investment is the process of selling a portion of government holdings in the PSUs.

Economics: CUET Mock Test - 2 - Question 13

Identify revenue expenditure from the given below

Detailed Solution for Economics: CUET Mock Test - 2 - Question 13

Subsidies given by the government is a revenue expenditure as it neither reduce liability nor increase assets.

Economics: CUET Mock Test - 2 - Question 14

_______ deficit includes interest payment by the government on the past loans.

Detailed Solution for Economics: CUET Mock Test - 2 - Question 14

It is an example of revenue deficit as it do not reduce liabilities.

Economics: CUET Mock Test - 2 - Question 15

Primary deficit in a government budget will b e zero, when _______

Detailed Solution for Economics: CUET Mock Test - 2 - Question 15

Primary deficit is the difference between fiscal deficit and interest payments. Primary deficit is zero when these two are equal.

Economics: CUET Mock Test - 2 - Question 16

Budget deficit is equal to total expenditure minus total receipts.

Detailed Solution for Economics: CUET Mock Test - 2 - Question 16

Fiscal deficit and budget deficit are different. Fiscal deficit excludes borrowing while budget deficit includes borrowings.

Economics: CUET Mock Test - 2 - Question 17

Which of the following measures of meeting deficit in budget, leads to an increase in money supply in the economy?

Detailed Solution for Economics: CUET Mock Test - 2 - Question 17

Any of the above method can be used to finance the deficit of budget.

Economics: CUET Mock Test - 2 - Question 18

 Choose the correct option from given below

Detailed Solution for Economics: CUET Mock Test - 2 - Question 18

During inflationary gap there is excess demand in the economy. So, a deficit budget is prepared.

Economics: CUET Mock Test - 2 - Question 19

If borrowings and other liabilities are reduced to the budget deficit, we get

Detailed Solution for Economics: CUET Mock Test - 2 - Question 19

Fiscal deficit is exclusive of borrowings or current financial year.

Economics: CUET Mock Test - 2 - Question 20

If primary deficit is ₹ 3,000 and interest payment is ₹ 500, the fiscal deficit is

Detailed Solution for Economics: CUET Mock Test - 2 - Question 20

Primary Deficit = Fiscal Deficit - Interest Payment 
3,000 = Fiscal Deficit - 500
Fiscal Deficit = 3,000 + 500 = ₹ 3,500

Economics: CUET Mock Test - 2 - Question 21

In a government budget, non-debt creating capital receipts is ₹ 200, revenue receipts are ₹ 1,500, borrowings are ₹ 150 while capital receipts and revenue receipts are respectively ₹ 250 and ₹ 300. What will be the fiscal deficit in this case?

Detailed Solution for Economics: CUET Mock Test - 2 - Question 21

Fiscal deficit is equal to borrowings of the given period. So, fiscal deficit will be equal to ₹ 150

Economics: CUET Mock Test - 2 - Question 22

_______ deficit includes interest payment by the government on the past loans.

Detailed Solution for Economics: CUET Mock Test - 2 - Question 22

Fiscal deficit and revenue deficit are inclusive of interest payments of previous year.

Economics: CUET Mock Test - 2 - Question 23

Government budget has ______ broad components.

Detailed Solution for Economics: CUET Mock Test - 2 - Question 23

There are two main components of budget i.e., revenue budget and capital budget.

Economics: CUET Mock Test - 2 - Question 24

Street light is an example of _______ good.

Detailed Solution for Economics: CUET Mock Test - 2 - Question 24

Street lights are provided by the government for public use.

Economics: CUET Mock Test - 2 - Question 25

Economic stability and equitable distribution of income and wealth can be achieved by the budgetary policy of the government.

Detailed Solution for Economics: CUET Mock Test - 2 - Question 25

Government budget has five major objectives, above two forms part of these objectives.

Economics: CUET Mock Test - 2 - Question 26

_______ is not an example of non-tax revenue from below.

Detailed Solution for Economics: CUET Mock Test - 2 - Question 26

Excise duty is an example of indirect tax.

Economics: CUET Mock Test - 2 - Question 27

Developing countries generally prepares a balanced budget.

Detailed Solution for Economics: CUET Mock Test - 2 - Question 27

Developing countries generally prepares a deficit budget due to its developmental needs.

Economics: CUET Mock Test - 2 - Question 28

Recently the union government introduced TJjjawala Yojna, which provides free LPG commission to the women in rural area. Which of the following objective of government budget is fulfilled in this case?

Detailed Solution for Economics: CUET Mock Test - 2 - Question 28

This scheme of the government aims to reducing the gap in income between people of urban and rural areas.

Economics: CUET Mock Test - 2 - Question 29

SEZ are created by the government to achieve the objective of

Detailed Solution for Economics: CUET Mock Test - 2 - Question 29

Special Economic Zones are created by the government to promote development of backward areas. This is in line with the objective of reallocation of resources.

Economics: CUET Mock Test - 2 - Question 30

Defence expenditures are examples of

Detailed Solution for Economics: CUET Mock Test - 2 - Question 30

Defence expenditure are an exception of revenue expenditure as it is a very large service area.

Economics: CUET Mock Test - 2 - Question 31

Choose the correct statement from given below

Detailed Solution for Economics: CUET Mock Test - 2 - Question 31

Fiscal deficit is financed by borrowings. So, these two are equal.

Economics: CUET Mock Test - 2 - Question 32

Choose the correct statement from given below about demonetisation announced on 8th November, 2016.

Detailed Solution for Economics: CUET Mock Test - 2 - Question 32

Demonetisation is an action taken by the government in association with the Central Bank of the country.

Economics: CUET Mock Test - 2 - Question 33

Primary deficit includes interest payment on previous borrowings.

Detailed Solution for Economics: CUET Mock Test - 2 - Question 33

Primary deficit excludes interest payments on previous loans.

Economics: CUET Mock Test - 2 - Question 34

Fiscal deficit and borrowings are one or the same thing.

Detailed Solution for Economics: CUET Mock Test - 2 - Question 34

Fiscal deficit is financed by borrowings only.

Economics: CUET Mock Test - 2 - Question 35

Assertion (A): Government budget is an annual estimated statement of revenue and expenditure during coming fiscal year.
Reason (R): Through government budget, it tries to reduce the regional variations.
Alternatives

Detailed Solution for Economics: CUET Mock Test - 2 - Question 35

Goverment budget is an annual and estimated statement of receipts and expenditure. Various objectives are targetted using the budget.

Economics: CUET Mock Test - 2 - Question 36

Assertion (A): Public goods are non-rivalrous.
Reason (R): The benefits of such goods can be enjoyed by all and are not restricted to any one person.
Alternatives

Detailed Solution for Economics: CUET Mock Test - 2 - Question 36

Public goods are the goods provided by the government for general public and no individual can be denied its consumption whether he pay taxes or not.

Economics: CUET Mock Test - 2 - Question 37

Assertion (A): Revenue budget of Government represents non-debt creating incomes.
Reason (R): Government budget is majorly comprised of receipts and expenditures on various account.
Alternatives

Detailed Solution for Economics: CUET Mock Test - 2 - Question 37

Government budget has two components revenue budget and capital budget. Revenue components includes those incomes which do not impact assets.

Economics: CUET Mock Test - 2 - Question 38

Directions: Read the following case study and answer the questions
Prime Minister Narendra Modi ’s second budget in seven months disappointed investors who were hoping for big-bang stimulus to revive growth in Asia’s third-largest economy. The fiscal plan delivered by Finance Minister Nirmala Sitharaman proposed tax reductions for individuals and wider deficit targets, but failed to provide specific steps to fix a struggling financial sector, improve infrastructure and create jobs. Stocks slumped, reflecting the subdued sentiment.
“Far from being a game changer, the budget provides little in terms of short-term growth stimulus,” said Priyanka Kishore, head of India and South-East Asia economics at Oxford Economics Ltd. in Singapore. “While income tax cuts will provide some relief on the consumption front, the multiplier effect is low and the overall stance of the budget is not expansionary.”
The focus now shifts to the Reserve Bank of India’s interest rate decision on February 6, 2020. Flowever, having already cut interest rates five times last year and with inflation exceeding 7 per cent, well above the central bank’s target, there’s limited scope for Governor Shaktikanta Das to ease more.

Q. A direct tax cut in government budget helps to stimulate economic growth by

Detailed Solution for Economics: CUET Mock Test - 2 - Question 38

A fall in tax rate leads to rise in disposable income (i.e., income after tax which further enhances productivity and growth.

Economics: CUET Mock Test - 2 - Question 39

Directions: Read the following case study and answer the questions
Prime Minister Narendra Modi ’s second budget in seven months disappointed investors who were hoping for big-bang stimulus to revive growth in Asia’s third-largest economy. The fiscal plan delivered by Finance Minister Nirmala Sitharaman proposed tax reductions for individuals and wider deficit targets, but failed to provide specific steps to fix a struggling financial sector, improve infrastructure and create jobs. Stocks slumped, reflecting the subdued sentiment.
“Far from being a game changer, the budget provides little in terms of short-term growth stimulus,” said Priyanka Kishore, head of India and South-East Asia economics at Oxford Economics Ltd. in Singapore. “While income tax cuts will provide some relief on the consumption front, the multiplier effect is low and the overall stance of the budget is not expansionary.”
The focus now shifts to the Reserve Bank of India’s interest rate decision on February 6, 2020. Flowever, having already cut interest rates five times last year and with inflation exceeding 7 per cent, well above the central bank’s target, there’s limited scope for Governor Shaktikanta Das to ease more.

Q. What will be the impact on the overall money supply if government reduces income tax slabs?

Detailed Solution for Economics: CUET Mock Test - 2 - Question 39

Government budget is an important aspect which impacts almost all macroeconomic indicators. A tax cut by the government leads to increase in savings in the banks which further leads to increase in money supply.

Economics: CUET Mock Test - 2 - Question 40

Directions: Read the following case study and answer the questions.
Budgetary deficits must be financed by either taxation, borrowing or printing money. Governments have mostly relied on borrowing, giving rise to what is called government debt. If the government continues to borrow year after year, then interest payments increase and these further increase the debt. Also, government borrowing from the people reduces the savings available to the private sector. This reduces capital formation and growth. These debts increases the burden on future generations as the debts raised today are required to be paid off in future.
Q. Budgetary deficits can be financed by

Detailed Solution for Economics: CUET Mock Test - 2 - Question 40

Deficit is the excess of expenditure over receipts and any of the above steps can be taken to fill this gap.

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