Tag: public finance and budget

Questions Related to public finance and budget

Total Expenditure - [Revenues Receipts + Recovering + Sale of Public Assets]=

economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

  1. Budgetary Deficit

  2. Fiscal Deficit

  3. Revenue Deficit

  4. Primary Deficit

Show answer
Correct Option: B
Explanation:

Fiscal deficit is defined as excess of total budget expenditure over total budget receipts excluding borrowings during a fiscal year. In simple words, it is amount of borrowing the government has to resort to meet its expenses. A large deficit means a large amount of borrowing. 

SKS Micro-finance Ltd, the only listed micro lender in the country founded by _____________.

economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

  1. Sudipa Sen

  2. M. B. N. Rao

  3. Kunal Ghosh

  4. Vikram Akula

Show answer
Correct Option: D
Explanation:

SKS Microfinance, the country’s only scheduled microlender, plans to change itself into a small bank as it seeks to decrease the cost of funds and progress productivity. 

Top management at the company told ET that the company will concern for a small bank licence, a move that may put it in direct competition with its separated founder Vikram Akula, who also plans to set up a small bank. 

“SKS is prepared to be relevant for a small bank licence as it meets all necessary criteria like net worth, PSL (priority sector lending) and branch network,” said the decision-making on condition of ambiguity. “We can provide to the need for financial inclusion and it will help us bring down our cost of funds.”

Thus, the correct option is D.

In a marine insurance, when must the insurable interest exist?

economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

  1. At the time of making contract

  2. At the time of loss of subject matter

  3. Both at the time of making contract and at the time of loss of subject matter

  4. At the time of termination of the policy

Show answer
Correct Option: B

What is 'winner's curse'?

economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

  1. In takeovers of companies, at times, the real benefit goes to the company, being taken over

  2. The possibility that the winning bidder in a auction will pay too much cost for an asset

  3. In mergers, usually the stronger firm gains but it pays a very high cost

  4. None of the above

Show answer
Correct Option: B
Explanation:

This takes place due to the fact that the winning bidder places a higher value on the asset than all other bidders-ultimately paying too much for the asset(thus, the curse of winner is that it wins but after paying very high a cost).

Fiscal capacity of the states in India is hugely compromised due to their lower revenue mobilisation in comparison to the other federal governments of the worldconsider the following statements and select the correct answer, using the code given below:
1. States in India generate very low share, of about $6$ per cent, of their revenue from direct taxes while the figure is $19$ per cent in case of Brazil and $44$ per cent in case of Germany.
2. Urban local bodies of India are closer to international norms in collecting revenue from direct taxes that is $18$ per cent of their total fundsbeing 1$19$ per cent in case of Brazil and $26$ per cent in case of Germany. 

economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

  1. Only 1

  2. Only 2

  3. 1 and 2

  4. Neither 1 nor 2

Show answer
Correct Option: C
Explanation:

Direct taxes account for about 7070 per cent of total taxes in Europe, in india the figure is around 3535 percent. The newly implemented GST might reinforce this if turns out to be a buyant source of revenue.

Select the incorrect one/ones about short-term finance in India from the given list using the code given below:
1. It fulfills the GoI, corporate houses, financial institutions, bank and the SBI DFHI.
2. Banks have been made available the least number of instruments of the money market in India.

economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

  1. Only 1

  2. Only 2

  3. 1 and 2

  4. Niti Aayog

Show answer
Correct Option: C
Explanation:

Both the statement are incorrect. If DFHI is not in the list, Statement 1 will become correct and similarly, money market of India makes maximum number of its instruments available to the banks (they are Call Money, Certificate of Deposit and Commercial Paper and the Repo).

Select the correct means by which the GoI manages its needs of deficit financing, using the code given below:
1. By printing currencies and internal borrowing
2. External grants, disinvestment proceeds and external borrowings

economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

  1. Only 1

  2. Only 2

  3. 1 and 2

  4. Neither 1 nor 2

Show answer
Correct Option: C
Explanation:

Had 'disinvestment proceeds' not been there, the second statement would also have been correct till 2004. Disinvestment proceeds used to be one of the means of raising money to meet fiscal deficit requirements till 2005 unitll there was no National Investment Fund (the proceeds now go directly into this fund and are considered Public Accounts of India since 2013.

Which of the following is/are correct about India's present fiscal situation?
1. Aggregate tax to GDP ratio of India is around 17 per cent.
2. The tax to GDP ratio of the Government of India (GoI) is around 10 per cent.
3. The tax to GDP ratio of the GoI falls to around 6.5 per cent after devolution to states.

economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

  1. Only 1

  2. Only 2

  3. 1 and 2

  4. 1,2 and 3

Show answer
Correct Option: D

In comparison to revenue deficit, the size of fiscal deficit is always _____.

economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

  1. higher

  2. smaller

  3. similar

  4. uncertain

Show answer
Correct Option: A
Explanation:

The fiscal deficit is the difference between the total revenue and total expenditure of the government. Revenue deficit hence arises when the government's actual net receipts is lower than the projected receipts. So, the size of fiscal deficit is always higher than revenue deficit.

Pick out the item which is not a part of non-plan expenditure on the revenue side.

economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

  1. Defence

  2. Central Assistance to states

  3. Subsidies

  4. None of the above

Show answer
Correct Option: B
Explanation:

Central assistance to states is not a part of non-plan expenditure on the revenue side. Non-plan revenue expenditure is accounted for by interest payments, subsidies (mainly on food and fertilisers), wage and salary payments to government employees, grants to States and Union Territories governments, pensions, police, economic services in various sectors, other general services such as tax collection, social services, and grants to foreign governments.