Tag: components of budget and budgetary procedure

Questions Related to components of budget and budgetary procedure

A __________ budget is useful during periods of high inflation.

business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

  1. deficit

  2. balanced

  3. suprlus

  4. zero-based

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Correct Option: C
Explanation:

Surplus Budget is the type of budget where the expected government revenue is greater than expected government expenditure due to which there is a surplus in the budget. Surplus budget is regarded as a positive indicator for the economy as it can be used during inflation through increased revenue that can soak liquidity from the economy and decrease the purchasing power. 

A deficit budget leads to an increase in the liability of the government or a decrease in its reserves.

business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

  1. True

  2. False

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Correct Option: A
Explanation:

Deficit budget is the type of budget where the estimated government expenditure is greater than the estimated government revenue due to which there is a deficit in the budget. Deficit budget is usually regarded as a negative indicator for the economy as it increases the liability of the government or decreases the reserves of the government. 

Which of the following is a component of the capital budget?

business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

  1. Capital receipts

  2. Revenue expenditure

  3. Capital expenditure

  4. Both A & C

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Correct Option: D
Explanation:

Capital budget are the money receipts or payments that lead to decrease or increase in the value of asset and liability of the government. It is divided into two heads 

1. Capital receipts- Capital receipts are all those money receipts of the government that either creates a liability for the government or reduce an asset of the government.
2. Capital expenditure - Capital expenditure are all those expenditure of the government that either creates an asset for the government or reduce the liability of the government. For example - Expenditure on land and building, purchase of shares etc.

A deficit budget proves to be useful during the periods of ____________.

business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

  1. inflation

  2. high employment

  3. depression

  4. none of the above

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Correct Option: C
Explanation:

Deficit budget is the type of budget where the estimated government expenditure is greater than the estimated government revenue due to which there is a deficit in the budget. Deficit budget is usually regarded as a negative indicator for the economy but it is regarded to be useful at the time of depression in the economy as it results in reduced taxes or increased public expenditure that resolves the situation of the depressed economy. 

Government budget comprises of which of the following?

business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

  1. Revenue budget

  2. Capital budget

  3. Administration budget

  4. Both A & B

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Correct Option: D
Explanation:

Budget is a statement of the estimates of the government receipts and government expenditure during the period of the financial year. There are two main component of a budget: 

1. Revenue budget - These are the money receipts or payments that does not lead to decrease or increase in the value of asset and liability of the government. 

2. Capital budget - These are the money receipts or payments that lead to decrease or increase in the value of asset and liability of the government. 

A surplus budget is useful in correcting inflationary gap by lowering the level of _____________.

business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

  1. taxation

  2. effective demand

  3. aggregate supply

  4. income inequality

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Correct Option: B
Explanation:


Surplus Budget is the type of budget where the expected government revenue is greater than expected government expenditure due to which there is a surplus in the budget. Surplus budget is regarded as a positive indicator for the economy as it can be used during inflation through increased revenue receipts by increasing taxes or through reduction in revenue expenditure by reducing public expenditure that can soak liquidity from the economy and decrease the purchasing power that results in fall of effective demand in the economy.

Revenue receipts of the government are classified into:

business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

  1. Tax revenue and borrowings

  2. Tax and non-tax revenue

  3. Borrowings and recovery of loans

  4. Non-tax revenue and recovery of loans

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Correct Option: B
Explanation:

Revenue receipts refers to all such types of money receipts that do not create any liability for the government or does not reduce any asset of the government. These basically includes tax and non-tax revenue received by the government from the general public. 

Tax revenue is the main source of regular receipts of the government.

business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

  1. True

  2. False

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Correct Option: A
Explanation:

Tax revenue are the money receipts of the government by the general public for the basic services which the public is availing from the government. These receipts are recurring in nature and it is an obligation for all the civilians of a country to pay tax. 

Capital receipts are regular and recurring in nature.

business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

  1. True

  2. False

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Correct Option: B
Explanation:

False. 

Capital receipts are all those money receipts of the government that either create a liability for the government or reduce an asset of the government. These receipts are not recurring in nature as it is related to the valuation of assets and liabilities of the government. 

Which of these is major component of external debt?

business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

  1. Short term debt

  2. Long term debt

  3. Commercial borrowings

  4. NRI deposits

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Correct Option: C
Explanation:

External debt is the portion of a country's debt that was borrowed from foreign lenders, including commercial banks, governments, or international financial institutions. These loans, including interest, must usually be paid in the currency in which the loan was made.