Case Study Chapter 5 Government Budget and Economy

Important Questions Class 12

Please refer to Case Study Chapter 5 Government Budget and Economy with answers provided below. These case study based questions are expected to come in the upcoming Class 12 Economics examinations. We have provided economics case studies with answers class 12 for all chapters on our website as per the latest examination pattern issued by CBSE, NCERT, and KVS.

Chapter 5 Government Budget and Economy Economics Case study with Answers Class 12

Case Based Questions :

Finance Minister Nirmala Sitharaman has pegged fiscal deficit for the coming year 2021-22 at 6.8% of GDP and aims to bring it back below the 4.5% mark by 2025-26. The original fiscal deficit target for 2020-21 was 3.5%. However, in reality, the deficit shot up to a high of 9.5% of GDP due to the double impact of the COVID-19 pandemic- low revenue flows due to the lockdown and negative economic growth clubbed with the high government spending to provide essential relief to the vulnerable sections of the society, as well as a stimulus package aimed at reviving domestic demand.

Question. Fiscal deficit is financed through:   
(a) Borrowings
(b) Tax revenue receipts
(c) Disinvestment
(d) All of the above

Answer

A

Question. If fiscal deficit is ₹4000 crore and interest payments is ₹500 crore, then primary deficit is: 
(a) ₹4,500 crore
(b) ₹ 3,500 crore
(c) ₹ 5,000 crore
(d) ₹ 4,200 crore

Answer

B

Question. Deficit budget refers to a situation when:   
(a) government’s budget expenditure is less than its budget receipts
(b) government’s budget expenditure is more than its budget receipts
(c) government’s budget expenditure is equal to its budget receipts
(d) government’s budget receipts are more than its budget expenditure

Answer

B

Question. Fiscal deficit is equal to: 
(a) Total expenditure -Total receipts other than borrowings
(b) Capital expenditure – Capital receipts
(c) Revenue expenditure – Revenue receipts
(d) Revenue expenditure + Capital expenditure – Revenue receipts

Answer

A

Presenting the Union Budget for 2021-22, Finance Minister Nirmala Sitharaman said that the budget proposals for this financial year rest on six pillars – health and well-being, physical and financial capital and infrastructure, inclusive development for aspirational India, reinvigorating human capital, innovation and R &D, and ‘Minimum Government, Maximum Governance’.
Significant announcements included a slew of hikes in customs duty to benefit Make in India, proposal to disinvest two more public sector banks (PSBs) and a general insurance company, and numerous infrastructure pledges to poll- bound states.

Question. Which of the following is not an objective of government budget? 
(a) Reallocation of resources
(b) Increasing regional disparities
(c) Economic Stability
(d) Economic Growth

Answer

B

Question. In which of the following taxes, the impact and incidence of the tax lies on different person? 
(a) Goods and service tax
(b) Custom duty
(c) Income tax
(d) both (a) and (b)

Answer

D

Question. Disinvestment of a general insurance company is an example of: 
(a) revenue receipt
(b) revenue expenditure
(c) capital receipt
(d) capital expenditure

Answer

C

Question. Expenditure on infrastructure is a capital expenditure because: 
(a) It creates liability of the government
(b) It reduces assets of the government
(c) It increases assets of the government
(d) It neither creates any liability nor reduces any asset of the government

Answer

C