Worksheet: Government Budget and the Economy- 1 | Economics Class 12 - Commerce PDF Download

Q1: Which of the following is Revenue expenditure?
(a) Construction of school
(b) Borrowings
(c) Grants given to the state governments.
(d) Loans given to the state governments

Q2: ____ Indicates the borrowing requirement of the govt.
(a) Revenue deficit
(b) Budgetary deficit
(c) Fiscal deficit
(d) Primary deficit

Q3: Identify which of the following is not an example of tax revenue for the government. (Choose the correct alternative)
(a) Wealth Tax
(b) Special Assessments
(c) Income Tax
(d) Corporate Tax

Q4: Find out incorrect statement from the following:
(a) A government budget is an estimation of receipts and expenditure for current year.
(b) A government budget is an estimation of receipts and expenditure for next financial year.
(c) Capital receipts decreases assets of the government.
(d) Subsidies are not treated as capital expenditure of the government.

Q5: Which of the following is a basis for comparison between direct and indirect taxes?
(a) Impact
(b) Shift of burden
(c) Coverage
(d) All of the above

Q6: Identify the correct formula to calculate Fiscal Deficit.
(a) Total expenditure - Total Receipt (other than borrowings)
(b) Revenue Expenditure- Revenue Receipt
(c) Capital Expenditure- Capital Receipt
(d) Revenue Expenditure + Capital expenditure - Revenue Receipt.

Q7: Match the item in column A to those in column B and choose the correct option:
 
(a) A-(iv), B-(i), C-(ii), D- (iii)
(b) A-(iv), B-(i), C-(iii), D- (ii)
(c) A-(iv), B-(iii), C-(ii), D- (i)
(d) A-(i), B-(iv), C-(ii), D- (iii)

Q8: In a govt. budget, revenue deficit is Rs. 50000 crores and borrowings are Rs.75000 crores. The fiscal deficit will be:
(a) Rs. 25000 crores
(b) Rs.125000 crores
(c) Rs.50000 crores
(d) Rs.75000 crores

Q9: Read the following statements carefully and choose the correct alternatives given below:
Statement 1 – Tax Revenue and non-tax revenue are increasing but recovery of loan is reducing.
Statement 2 –Revenue receipts and capital receipts are decreased from 2019 to 2021
Alternatives:
(a) Both the statements are true.
(b) Both the statements are false.
(c) Statement 1 is true and Statement 2 is false
(d) Statement 2 is true and Statement 1 is false

Q10: Read the following statements – Assertion (A) and Reason (R). Choose one of the correct alternatives given below
Question. Assertion (A): GST is imposed on goods and services and it is an indirect tax.
Reason (R): Indirect taxes are those tax whose money burden cannot be shifted.
(a) Both Assertion (A) and Reason (R) are true, (R) is correct explanation of (A).
(b) Both Assertion (A) and Reason (R) are true but (R) is not correct explanation of (A).
(c) Assertion (A) is true and Reason (R) is false.
(d) Assertion (A) is false and Reason (R) is true.

Q11: Assertion (A): Recovery of loan by the government is capital receipts.
Reason (R): Disinvestment is revenue receipts of the government.
(a) Both Assertion (A) and Reason (R) are true, (R) is correct explanation of (A).
(b) Both Assertion (A) and Reason (R) are true but (R) is not correct explanation of (A).
(c) Assertion (A) is true and Reason (R) is false.
(d) Assertion (A) is false and Reason (R) is true.

Read the following paragraph carefully and Answer: the given questions 
Every govt. seeks to control and give direction to economic activities. For this purpose, it may exercise a large number of instruments available to it. Among these instruments, the most important is the fiscal policy, which operates through the financial operations of the government. In modern times the responsibilities and functions of a government have been gradually increasing as the areas of the activity are expanding continuously. It requires more and more finance as the corresponding expenditures are moving northwards. The government has to perform innumerable functions for ensuring economic growth and development of the country for which it has to take care of public revenue and public expenditure.
Q12: Fiscal policy is the policy of the …….
(a) Government
(b) Central Bank
(c) Both govt. and central bank
(d) None of these.

Q13: During the time of inflation, govt. should go for ____ budget.
(a) Deficit
(b) Surplus
(c) Balanced
(d) Capital

Read the following paragraph and Answer: the given questions 
In the modern world, govt. aims at maximizing the welfare of the people and the country. It requires various infrastructure and economic welfare activities. These activities require huge govt. spending through appropriate planning and policy. Budget provides a solution to all these concerns. Budget is prepared by the government at all levels.
Estimated expenditure and receipts are planned as per the objectives of the government. In India, budget is prepared by the parliament on such a day as the president may direct. The parliament approves the budget before it can be implemented. The receipts and expenditures as shown in the budget are only the estimated values for the upcoming fiscal year, and not the actual figure.
Q14: Which of the following is not an objective of the govt. budget?
(a) Reallocation of resources.
(b) Re distribution of income
(c) Reducing expenditure
(d) Economic stability.

Q15: Govt. budget is a statement of actual receipts and payments of the govt. (True/False)
(a) True
(b) False

Short Answer: Question and Answer

Q1: What are the different sources of nontax revenue?

Q2: Distinguish between revenue receipt and capital receipt.

Q3: Define fiscal deficit and write any three implications of fiscal deficit. 

Q4:  Explain how the govt. is using as an instrument for reducing the inequalities in income.

Q5: What do you mean by deficit budget? What are its types?

Q6: ‘’Through its budgetary policy govt. allocates resources in accordance with the requirements of the country.’’ Do you agree? Justify your Answer: with valid reason.

Q7: What do you mean by revenue deficit? Write its implications.

Q8: What do you mean by unbalanced budget? What are its types?

Long Answer: Questions

Q1: Define govt. budget and explain its major objectives.

Q2: Define tax and differentiate between direct and indirect tax. Give examples

Q3: What are the different sources of capital receipts? Explain. 

Q4: Questions are to be Answered on the basis of the data given below (in ₹ Crores) Budget at a Glance

Q5: The percentage change in the Tax Revenue, between 2019- 20 (Actual) and 2020-21 (Budgeted Estimate), taking the 2019-20 as base, would be ____________. (Fill up the blank with correct alternative)
(a) 15.02%
(b) 20.56%
(c) 17.06%
(d) 20.01%

Q6: The value of borrowings and other liabilities has ___________ crores between 2019-20 (Actual) and 2020- 21 (Budgeted Estimate). (Fill up the blank with correct alternative)
(a) Fallen by ₹ 137314
(b) Risen by ₹ 137314
(c) Fallen by ₹ 137324
(d) Risen by ₹ 137324

Q7: The value of borrowings for the year 2020-21, would be ₹ _____________ crores. (Fill up the blank with correct alternative))
(a) 88134
(b) 796337
(c) 933651
(d) 666545

Q8: The percentage change in the Total receipts, between 2019- 20 (Actual) and 2020-21 (Budgeted Estimate), taking the 2020- 21 as base, would be ____________. (Fill up the blank with correct alternative)
(a) 11.70%
(b) 13.14%
(c) 13.24%
(d) 10.01%

Numerical illustrations:

Q2: Define Balanced, Surplus and Deficit Budgets.

Q3: Explain the four different concepts of Budget deficit.

Q4: How is tax revenue different from administrative revenue?

Q5: What is a balanced government budget? Explain the multiplier effect of a balanced budget.

Q6: What are the three levels at which the budget impacts the economy?

You can access the solutions to this worksheet here.