CHIRANJIV BHARTI SCHOOL

SESSION: 2012-13
GOVERNMENT BUDGET AND THE ECONOMY
CLASS: XII SUBJECT: ECONOMICS
I mark questions
Q1 What is government budget?
Q2 State any one objective of government budget.
Q3 Give meaning of a tax.
Q4 Give meaning of fiscal deficit.
Q5 Give meaning of revenue deficit.
Q6 Give meaning of Primary deficit.
Q7 Give meaning of net primary deficit.
Q8 why are borrowings by the government capital receipts?
Q9 Primary deficit of the government is Rs. 50,000 crores. Interest payment on revenue account is Rs.
1000 crores. what will be fiscal deficit?
Q10 In a government budget revenue deficit is Rs. 50,000. Borrowings are 75,000 what will be the fiscal
deficit?
Q11Why is payment of receipts revenue expenditure?
Q12 State any two sources of non tax revenue.
Q13 Why is an entertainment tax an indirect tax?
Q14 Why is tax not a capital receipt?
Q15Classify following as direct or indirect tax with reasons.
Entertainment tax wealth tax passenger tax corporate tax Estate Duty Gift tax custom
duty Excise duty
Q16 Calculate fiscal deficit.
Total Expenditure 1,00,000
Revenue receipts 85,000
Non Debt Borrowings 5,000
Q17 Who makes budget for Indian economy?
3 or 4 marks
Q1 Distinguish between
a) Revenue receipts and capital receipts
b) Direct tax and indirect tax
c) Revenue expenditure and capital expenditure
d) fiscal deficit and revenue deficit
e) fiscal deficit and Primary deficit
Q2 What is fiscal deficit? What odes it indicate?
Q3 What is revenue deficit? what problems arise out of it?
Q4 Giving reasons classify the following into revenue receipts and capital receipts:
i) Recovery of loans ii) Sale of PSU iii) Corporation tax iv) Dividend on investment made by government
v) Interest received on loans vi) Grants from foreign government
Q5 Can there be fiscal deficit in budget without revenue deficit? Explain.
Q6 Briefly explain the relationship between revenue deficit and fiscal deficit.
Q7 Briefly explain objectives of government budget.
Q8 The fiscal deficit gives the borrowing requirements of government. Elucidate.
Q9 Are fiscal deficits necessarily inflationary in nature? Explain.
Q10 Classify the following into Capital Expenditure and Revenue Expenditure.
a) Defense Expenditure
b) Construction of Metro Rail
c) Salaries of Government Employees
d) Construction of School Building
e) Maintenance of Law and Order
f) Street Lighting
g) Repayment of Loans
h) Payment of Interest
Q11 Classify the following into Capital Receipts and Revenue Receipts
a. Taxes
b. Recovery of Loans
c. Sale of Shares of Public Sector Undertakings
d. Penalty
e. Profits of PSUs
Borrowings


IMPLICATIONS:

Revenue Deficit: That the govt is dissaving and utilizing the saving of other sector of economy. It tells us
revenue receipt is fall short of revenue expenditures. Govt. has to make up his short fall from capital
receipt, borrowing or through sale of assets. Revenue deficit provides us information about govt.
borrowings to meet its revenue expenditure. For the growth of economy we must try to control revenue
deficit.


Fiscal Deficit: This deficit indicates total borrowing requirements of the govt. from all sources. A large
fiscal deficit may also be inflationary. Gross fiscal deficit = Net borrowing from home + borrowing from
RBI and other institutions + borrowing from abroad.
Fiscal deficit measures are an addition to the liabilities of govt. larger fiscal deficit larger borrowings.It
creates many problem for the economy. It increases govt. liability to pay the interest and repay the
loans .Payment of interest increases revenue expenditure. This may lead ti higher fiscal deficit.

Primary Deficit: It indicates borrowing requirements of the government to meet fiscal deficit net of
interest payments. It enables us to see the way the govt. is currently conducting its financial affairs.