NCERT Class 12 Economics Part 2 Chapter 5 Government budget and the Economy Extra Questions and Answers
Class 12 Economics Part 2 Chapter 5 Extra Inside Questions and Answers – Government budget and the Economy. Here in this Page Class XII Students can Learn Extra Questions & Answer 5th Chapter Economics Part 2 fully Inside.
We Provided Here Government budget and the Economy Economics Part 2 Chapter 5 Long Answer Type Question, MCQ Questions & Answer, Short Answer Type Questions (2 or 3 marks), and Very Short answer Type Question (1 marks) Solution.
Class 12 Economics Part 2 Chapter 5 Inside based Question
Economics Part 2 Chapter 5 Government budget and the Economy Class 12 Inside 5 Marks, 3 marks, 2 Marks & And 1 Marks Important Questions and Answers.
1.) Which of the following is not a objective of government budget.
(a) Allocation Function of Government Budget
(b) Redistribution Function of Government Budget
(c) Stabilisation Function of Government Budget
(d) Revenue expenditure
ANS- Option ( d)
2.which of the following expenditure incurred for purposes other than the creation of physical or financial assets of the central government
(a) Revenue expenditure
(b) Capital expenditure
(c) capital receipt
(d) Revenue receipt
Ans-option (a)
3. Budget documents classify total expenditure into .
(a)plan expenditure
(b)non plan expenditure
(c) revenue expenditure
(d)both (a)and (b)
Ans- option (d)
4.) The government may spend an amount equal to the revenue it collects. This is known as
(a) balance budget
(b) surplus
(c) deficit
(d)none of the above
Ans – Option (a)
5.An economy in which there is both the private sector andthe Government is known as a
(a) mixed economy
(b) Capital economy
(c)Free market economy
(d) Traditional economy
And – Option (a)
6.Whentax collection exceeds the required expenditure, the budget is said to be in
(a) Deficit
(b) Balance
(c) Surplus
(d)None of the above
Ans – Option (c)
7.The revenue deficit refers to the excess of government’srevenue expenditure over
(a) Revenue expenditure
(b) Capital expenditure
(c) capital receipt
(d) Revenue receipt
Ans -Option (d)
1.what is the main budget documents of the government?
Ans –
There is a constitutional requirement in India (Article 112) to present before the Parliament a statement of estimated receiptsand expenditures of the government in respect of every financial year which runs from 1 April to 31March. This ‘Annual Financial Statement’ constitutes the main budget document of the government.
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2.) what are the objective of the government?
Ans – There are three objectives of government as follows.
1.Allocation Function of Government Budge.
2.Redistribution Function of Government Budget
3.Stabilisation Function of Government Budget.
3.) what are the different between the public good and private goods ?
Ans –
1.) The benefits of public goods are available to alland are not only restricted to one particular consumer. For example, ifa person eats a chocolate or wears a shirt, these will not be available toothers. It is said that this person’s consumption stands in rivalrelationship to the consumption of others. However, if we consider apublic park or measures to reduce air pollution, the benefits will beavailable to all. One person’s consumption of a good does notreduce theamount available for consumption for others and so several people canenjoy the benefits, that is, the consumption of many people is not‘rivalrous’.
2.) In case of private goods anyone who does not pay for the goods can be excluded from enjoying its benefits. If you do not buy a ticket,you will not be allowed to watch a movie at a local cinema hall. However,in case of public goods, there is no feasible way of excluding anyone from enjoying the benefits of the good. That is why public goods are called non-excludable. Even if some users do not pay, it is difficult and sometimes impossible to collect fees for the public good. These nonpaying users are known as ‘free-riders’. Consumers will not voluntarily pay for what they can get for free and for which there is no exclusive title to the property being enjoyed. The link between the producer and consumer which occurs through the payment process is broken and the government must step in to provide for such goods.
4.what is mean by redistributed function ?
Ans –
The government sector affects the personal disposable income of households by making transfers and collecting taxes. It is through this that the government can change the distribution of income andbring about a distribution that is considered ‘fair’ by society. This is there distribution function.
5. What is revenue receipt and capital receipt?
Ans –
1.Revenue Receipts: Revenue receipts are those receipts that do not lead to a
claim on the government. They are therefore termed non-redeemable. They are divided into tax and non-tax revenues. Tax revenues, an important component of revenue receipts, have for long been divided into direct taxes (personal income tax) and firms (corporation tax), and indirect taxes like excise taxes (duties levied on goods produced within the country), customs duties (taxes imposed on goods imported into and exported out of India) and service tax1. Other direct taxes like wealth tax, gift tax and estate duty (now abolished) have never brought in large amount of revenue and thus have been referred to as ‘paper taxes’.
2. Capital Receipts: The government also receives money by way of loans orfrom the sale of its assets. Loans will have to be returned to the agencies fromwhich they have been borrowed. Thus they create liability. Sale of government assets, like sale of shares in Public Sector Undertakings (PSUs) which is referred to as PSU disinvestment, reduce the total amount of financial assets of the government. All those receipts of the government which create liability or reduce financial assets are termed as capital receipts. When government takes fresh loans it will mean that in future these loans will have to be returned and interest will have to be paid on these loans. Similarly, when government sells an asset, then it means that in future its earnings from that asset, will disappear. Thus, these receipts can be debt creating or non-debt creating.
6.what is mean by Balance, surplus, Deficit budget?
Ans –
The government may spend an amount equal to the revenue it collects. This is known as a balanced budget. If it needs to incur higher expenditure, it will have to raise the amount through taxes in order to keep the budget balanced. When tax collection exceeds the required expenditure, the budget is said to bein surplus. However, the most common feature is the situation when expenditure exceeds revenue. This is when the government runs a budget deficit.
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