Can there be a fiscal deficit in a government budget without a revenue deficit? Explain.

Is balanced budget good for India?

India is suffering from the problem of fiscal deficit for the last many years. Explain any two steps to deal with such a problem.

Giving reasons, classify the following into direct and indirect tax:

1. Wealth tax.
2. Value added tax.
3. Entertainment tax.
4. Income tax.

Giving reasons, classify the following into direct tax and indirect tax.

1. Wealth tax.
2. Entertainment tax.
3. Income tax.

Regulation of prices in the case of agricultural products is not only desirable but necessary. Explain.

Levy of taxes on all commodities without caring for their impact on the common man is not desirable. Comment.

How can a deficit be financed?

Elaborate the significance of the Goods and Services Tax (GST).

Giving reasons, state whether the following statements are true or false:

1. Value added tax is a direct tax.
2. Subsidies are treated as revenue expenditure.
3. Borrowings from public are treated as revenue receipts.
4. Revenue deficit is a part of fiscal deficit.

Give the relationship between the revenue deficit and the fiscal deficit.

Give the meaning of (a) tax revenue, and (b) non-tax revenue. Give one example of each.

In India a majority of population is lying below poverty line due to inequality of 'Income and Wealth'. How can budget be helpful in solving this problem?

What are non-debt creating capital receipts? Give two examples of such receipts.

Explain how government budget can be helpful in bringing economic stabilisation in the economy.

Explain the concept of 'fiscal deficit' in a government budget. What does it indicate?

Explain the 'redistribution of income' objective of a government budget.

Explain the 'economic stability' objective of a government budget.

Distinguish between:

1. Capital expenditure and Revenue expenditure
2. Fiscal deficit and Primary deficit

Explain any two objectives of a government budget.

What is revenue deficit? What are its implications?

Distinguish between ‘fiscal deficit’ and ‘revenue deficit’. What does fiscal deficit indicate?

Distinguish between ‘revenue expenditure’ and ‘capital expenditure’. Give two examples of each.

Giving reasons categorise the following into revenue expenditure and capital expenditure:

1. Subsidies.
2. Grants given to State Governments.
3. Repayment of loans.
4. Construction of school buildings.

Explain how can government budget be useful in influencing allocation of resources in an economy.

Calculate marginal propensity to consume from the following data about an economy which is in equilibrium:

Explain how government budget can be used to influence distribution of income?

Government incurs expenditure to popularise yoga among the masses. Analyse its impact on gross domestic product and welfare of the people.

Government raises its expenditure on producing public goods. Which economic value does it reflect? Explain.

Calculate investment expenditure from the following data about an economy which is in equilibrium:
National income = 1000
Marginal propensity to save = 0.25
Autonomous consumption expenditure = 200

Explain 'revenue deficit' in a Government budget? What does it indicate?

Explain the 'allocation of resources' objective of Government budget.

From the following data about a Government budget, find out (a) Revenue deficit, (b) Fiscal deficit and (c) Primary deficit:

		(Rs. Arab)
(i)	Capital receipts net of borrowings	95
(ii)	Revenue expenditure	100
(iii)	Interest payments	10
(iv)	Revenue receipts	80
(v)	Capital expenditure	110

Giving reasons classify the following into intermediate products and final products:

1. Furniture purchased by a school.
2. Chalks, dusters, etc. purchased by a school.

Distinguish between:

1. Capital receipts and revenue receipts.
2. Direct tax and indirect tax.

Distinguish between:

1. Direct tax and indirect tax.
2. Revenue deficit and fiscal deficit.

What is fiscal deficit? What are its implications?

Distinguish between ‘revenue receipt’ and ‘capital receipt’ and give two examples of each.

Giving reasons, categorise the following into revenue receipts and capital receipts:

1. Recovery of loans.
2. Corporation tax.
3. Dividends on investments made by government.
4. Sale of a public sector undertaking.

1. How are tax receipts different from non-tax receipts? Discuss briefly.
2. State any two items of revenue expenditure in a Government budget.

1. Define ‘Revenue Expenditure’.
2. Distinguish between Direct tax and Indirect tax.

How are capital receipts different from revenue receipts? Discuss briefly.

Distinguish between revenue expenditure and capital expenditure.

Define capital receipts of government. Describe briefly the groups in which these are classified.

Explain why the tax multiplier is smaller in absolute value than the government expenditure multiplier.

What is the difference between Revenue Budget and Capital Budget?

If you are appointed as the Finance Minister of India, which taxes would you prefer, direct taxes or indirect taxes and why?

Name two sources each of non-tax revenue receipts.

If you were to be appointed as the Finance Minister of India, which taxes would you prefer: direct taxes or indirect taxes and why?

We suppose that C = 70 + 0.70Y D, I = 90, G = 100, T = 0.10Y.

1. Find the equilibrium income.
2. What are tax revenues at equilibrium income?

Does the government have a balanced budget?

What are implications of fiscal deficit?

Giving reasons, categorise the following into direct of tax and indirect tax:

1. Corporation tax.
2. Sales tax.
3. Wealth tax.
4. Service tax.

Read the passage given below and answer the following questions from 1 to 4. India has scaled back expenditure, including on productive assets that aid economic growth, as the government is confronted with the risk of its budget deficit blowing out. Capital expenditure-the money spent on creating, maintaining or improving fixed assets like roads and factories-Stood at 40% of the budgeted amount in the six months to September, down from 55.5% in the year-ago period, data from the government's Controller General of Accounts show. The overall spending during the period was 49% of the budget aim compared to 53% last year. That's despite Prime Minister Narendra Modi's Government outlining measures worth more than 21 trillion rupees (281 billion) to counter the economic and social fallout of the Covid-19 outbreak. A closer look at the numbers shows the bulk of the spending was directed towards the poor and the farmers, with crucial sectors such as coal, power, shipping and steel receiving less than a third of their annual budget allocation. Spending on capital assets has so far trailed the so-called revenue expenditure that includes interest payments and overheads such as salaries, the data released last week showed. Modi's Government placed spending curbs on some ministries from April through December to manage its cash flow. Source: Business Standard, Nov. 5, 2020

1. Capital expenditure of the government ............ the assets of the government:

1. Increases
2. Decreases
3. Both [a] and [b]
4. None of these

2. Expenditure on health due to Covid-19 is ............ expenditure of the government.

1. Direct
2. Revenue
3. Both [a] and [b]
4. None of these

3. The overall spending has......... as compared to last year.

1. Increased
2. Decreased
3. Both [a] and [b]
4. None of these

4. A closer look at the numbers shows the bulk of spending was directed towards the poor and the.............?

1. Farmers
2. Labour
3. Manager
4. None of these

 
 

Suppose marginal propensity to consume is 0.75 and there is a 20 percent proportional income tax. Find the change in equilibrium income for the following (a) Government purchases increase by 20, (b) Transfers decrease by 20.

Discuss the issue of deficit reduction.

Differentiate between Developmental and Non-Developmental Expenditure.

Which of the following is/ are included in the capital budget of the government? Give reasons for your answer.

1. Borrowings from the public.
2. Loans received from foreign government.
3. Expenditure on acquisition of assets like roads, buildings, machinery etc.
4. Loans and advances granted to the States Government.

Read the passage given below and answer the following questions from 1 to 4.
In the Government of India's budget for the year 2013 - 14, the Finance Minister proposed to raise the Goods and Services Tax (GST) on cigarettes. He also proposed to increase income tax on individual earning more than rupee one crore per annum.

1. Identify the taxes proposed to be increased by the Budget 2013 - 14. The taxes proposed are:

1. Goods and Services tax on cigarettes.
2. Income tax on individuals earning Rs. 1 crore or above.
3. Both [a] and [b]
4. None of the above

2. What was the objective(s) behind the proposals put forth in the Budget 2013 - 14?

1. Revenue generation
2. Social welfare
3. Both [a] and [b]
4. None of these

3. What welfare objective the government wishes to achieve by increasing GST on cigarettes?

1. This will discourage their cigarettes
2. This will encourage their cigarettes
3. Both [a] and [b]
4. None of the above

4. What would be the effect of increase in direct tax on the rich?

1. It will reduce the gap between rich and the poor, thereby reducing inequalities in income
2. It will increase the gap between rich and the poor
3. Both [a] and [b]
4. None of the above

Differentiate between Revenue Budget and Capital Budget.

Which of the following is/are included in the revenue budget of the government? Give reasons for your answer.

1. Tax revenue.
2. Non-tax revenue.
3. Loans received from foreign governments.
4. Small savings.
5. Interest payments.

What is the difference between direct tax and indirect tax? Explain the role of government budget in influencing allocation of resources.

What is the difference between revenue expenditure and capital expenditure? Explain how taxes and government expenditure can be used to influence distribution of income in the society.

Explain how the government can use the budgetary policy in reducing inequalities in incomes.

Explain the meaning of under-employment equilibrium. Explain two measures by which full-employment equilibrium can be reached.

Explain the concept of 'inflationary gap'. Also, explain the role of 'legal reserves' in reducing it.

Explain the concept of 'deflationary gap'. Also, explain the role of 'margin requirements' in reducing it.

Explain the distinction between Revenue receipts and Capital receipts in a government budget. Give their components.

Explain the distinction between the following:

1. Revenue expenditure and Capital expenditure in a government budget.
2. Primary deficit and Fiscal deficit.

What are revenue receipts? Explain the role of government budget in bringing stability in the economy.

What is government budget? Explain the role of government budget in influencing allocation of resources in the economy.

Define revenue receipts in a government budget. Explain how government budget can be used to bring in price stability in the economy.

Assuming that no resource is equally efficient in production of all goods, name the curve which shows production potential of the economy. Explain, giving reasons, its properties.

Explain the role the government can play through the budget in influencing allocation of resources.

What is government budget? Explain how taxes and subsidies can be used to influence allocation of resources.

Explain:

1. Allocation of resources.
2. Economic stability as objectives of government budget.

What is government budget? Explain its major components.

Explain the meaning of the following:

1. Revenue deficit.
2. Fiscal deficit.
3. Primary deficit.

Explain the following objectives of government budget:

1. Allocation of resources.
2. Reducing income inequalities.

In an economy, if initial investments are increased by ₹ 100 crores, discuss the working of investment multiplier presuming marginal propensity to consume is 0.8.

Consider an economy described by the following functions: C = 20 + 0.80Y, I = 30, G = 50, TR = 100.

1. Find the equilibrium level of income and the autonomous expenditure multiplier in the model.
2. If government expenditure increases by 30, what is the impact on equilibrium income?
3. If a lump-sum tax of 30 is added to pay for the increase in government purchases, how will equilibrium income change?

In the above question, calculate the effect on output of a 10 percent increase in transfers, and a 10 percent increase in lump-sum taxes. Compare the effects of the two.

Suppose that for a particular economy, investment is equal to 200, government purchases are 150, net taxes (that is lump-sum taxes minus transfers) is 100 and consumption is given by C = 100 + 0.75Y,

1. What is the level of equilibrium income?
2. Calculate the value of the government expenditure multiplier and the tax multiplier.
3. If government expenditure increases by 200, find the change in equilibrium income.

How is the exchange rate determined under a flexible exchange rate regime?

How is tax revenue different from administrative revenue?

Other things remaining the same, when in a country the market price of foreign currency falls, national income is likely: (Choose the correct alternative)

1. To rise.
2. To fall.
3. To rise or to fall.
4. To remain unaffected.

Foreign exchange transactions which are independent of other transactions in the Balance of Payments Account are called: (Choose the correct alternative)

1. Current transactions.
2. Capital transactions.
3. Autonomous transactions.
4. Accommodating transactions.

Balance of Payments ‘deficit’ is the excess of:

1. Current account payments over current account receipts.
2. Capital account payments over capital account receipts.
3. Autonomous payments over autonomous receipts.
4. Accommodating payments over a accommodating receipts.

Foreign exchange transactions dependent on other foreign exchange transactions are called: (Choose the correct alternative)

1. Current account transactions.
2. Capital account transactions.
3. Autonomous transactions.
4. Accommodating transaction.

Balance of Trade refers to balance of exports and imports of:

1. Visible items.
2. Invisible items.
3. Both.
4. None.

When one country manipulates exchange rate against the interest of other country, is known as ________.

1. managed floating.
2. dirty floating.
3. wide band.
4. crawling peg.

Which exchange rate is officially declared by the government?

1. Managed Floating Rate.
2. Floating Exchange Rate.
3. Fixed Exchange Rate.
4. None.

________ involves transactions related to transfers of assets and liabilities in BoP account.

1. Balance of trade account
2. Current account
3. Unilateral transfer account
4. Capital account

Match the following.

1	Visibles	(i)	Foreign investment and borrowing
2	Invisible	(ii)	Transportation and communication
3	Capital account	(iii)	Car and mobiles
4	Unilateral transfers	(iv)	Grants and donations

Codes: I II III IV

1. (ii) (i) (iii) (iv)
2. (iii) (ii) (i) (iv)
3. (iii) (iv) (ii) (i)
4. (i) (ii) (iii) (iv)

Balance of Payments deficit is calculated by taking into account the _______ only.

1. accommodating transactions
2. autonomous transactions
3. unilateral transactions
4. None of the above

What will be the effect on exports if foreign exchange rate increases?

1. Increases.
2. Decreases.
3. Remains constant.
4. None of them.

Increase in the value of domestic currency through market forces is called _______.

1. depreciation.
2. devaluation.
3. revaluation.
4. appreciation.

The exchange rate determined by the free play of the forces of demand and supply of foreign exchange is:

1. Flexible Exchange Rate.
2. Fixed Exchange Rate.
3. Managed Floating.
4. None.

The supply of foreign exchange comes from ________.

1. the foreigners purchasing home country's goods and services through exports.
2. the foreigners who invest in home country through joint ventures or through financial market operations.
3. currency dealers and speculators.
4. all of them.