UPSC Prelims Marathon 21 July - GOVERNMENT BUDGET AND THE ECONOMY

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We are posting prelims marathon MCQs for today. In this initiative, you can attempt 10 subjectwise MCQs daily. Daily Quiz UPSC Prelims Marathon 21 July GOVERNMENT BUDGET AND THE ECONOMY

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Question No. 1

With reference to the Government Budget in India, consider the following statements:
1.The Revenue Budget includes all those receipts and expenditures which are confined to the current financial year and do not affect the government’s assets or liabilities.
2.The Capital Budget comprises those items that lead to creation or reduction of government assets and liabilities.
Which of the statements given above is/are correct?

A1 only

B2 only

CBoth 1 and 2

DNeither 1 nor 2

Question No. 2

With reference to the objectives of the Government Budget in India, consider the following statements:
1.The allocation function of the budget implies the provision of public goods like national defense and pollution control, which are non-rivalrous and non-excludable in nature.
2.The redistribution function of the budget aims to ensure a fair distribution of income by altering personal disposable income through taxation and transfer payments.
Which of the statements given above is/are correct?

A1 only

B2 only

CBoth 1 and 2

DNeither 1 nor 2

Question No. 3

With reference to the Stabilisation Function of the Government Budget, consider the following statements:
1.The stabilisation function aims to correct fluctuations in income, employment, and prices by influencing aggregate demand in the economy.
2.During periods of low demand and underutilization of resources, the government may intervene to reduce aggregate demand through restrictive fiscal measures.
3.In situations of excessive demand and inflation, the government can adopt policies to contract demand and stabilise prices.
Which of the statements given above is/are correct?

A1 and 2 only

B1 and 3 only

C2 and 3 only

D1, 2 and 3

Question No. 4

With reference to the classification of receipts in the Government Budget, consider the following statements:
1.Revenue receipts do not create any future liability for the government and are therefore non-redeemable.
2.Capital receipts include both debt-creating sources such as borrowings and non-debt-creating sources such as disinvestment.
3.All forms of tax revenue are progressive in nature and aim to reduce income inequality.
Which of the statements given above is/are correct?

A1 and 2 only

B2 and 3 only

C1 and 3 only

D1, 2 and 3

Question No. 5

With reference to the classification of government expenditure in India, consider the following statements:
1.Revenue Expenditure does not lead to the creation of physical or financial assets and includes interest payments, subsidies, and salaries.
2.Capital Expenditure includes spending that results in the acquisition of assets or reduction of liabilities, such as investments in shares or construction of infrastructure.
3.According to the Fiscal Responsibility and Budget Management Act (FRBMA), revenue expenditure must always be financed through capital receipts and borrowings.
Which of the statements given above is/are correct?

A1 and 2 only

B2 and 3 only

C1 and 3 only

D1, 2 and 3

Question No. 6

With reference to government deficit measures in India, consider the following statements:
1.Revenue deficit occurs when the government’s total expenditure exceeds its total receipts, excluding borrowings.
2.Fiscal deficit represents the total borrowing requirement of the government and includes revenue deficit as a component.
3.Primary deficit helps isolate the current fiscal imbalance by subtracting interest payments from the fiscal deficit.
Which of the statements given above is/are correct?

A2 and 3 only

B1 and 2 only

C1 and 3 only

D1, 2 and 3

Question No. 7

Consider the following statements regarding government budgets:
1.A balanced budget is when government expenditure is equal to its revenue.
2.A budget surplus occurs when government revenue falls short of its expenditure.
3.A budget deficit is a situation where government expenditure exceeds its revenue.
Which of the statements given above is/are correct?

A1 and 2 only

B1 and 3 only

C2 and 3 only

D1, 2 and 3

Question No. 8

Consider the following statements with reference to government budgeting terms:
1.Receipts include both the money earned by the government and the money it borrows or receives as repayment of loans.
2.Plan expenditure includes routine items like pensions, interest payments, and statutory transfers to states.
3.Non-plan expenditure covers spending on infrastructure projects like electricity, roads, and irrigation.
Which of the statements given above is/are correct?

A1 only

B1 and 2 only

C2 and 3 only

D1, 2 and 3

Question No. 9

Consider the following statements regarding types of budgeting followed by the Government of India:
1.Zero-Based Budgeting requires justification for all expenditures from a zero base in each new budget cycle.
2.Outcome Budget was introduced in 2005 to link the money allocated to ministries with measurable results.
3.Gender Budgeting focuses solely on increasing the overall budget allocation for women-centric ministries.
Which of the statements given above is/are correct?

A1 and 2 only

B2 and 3 only

C1 and 3 only

D1, 2 and 3

Question No. 10

With reference to the Fiscal Responsibility and Budget Management (FRBM) Act, 2003, consider the following statements:
1.The FRBM Act mandates the elimination of revenue deficit and creation of a revenue surplus thereafter.
2.Under the FRBM Act, the Central Government is allowed to borrow from the RBI only under exceptional circumstances like national security or natural calamity.
3.The FRBM Act requires the government to present a Medium Term Fiscal Policy Statement and Fiscal Policy Strategy Statement before the Parliament annually.
Which of the statements given above is/are correct?

A1 and 2 only

B2 and 3 only

C1 and 3 only

D1, 2 and 3