INDIAN SCHOOL AL WADI AL KABIR
Class: XII Department: Commerce
Revision Worksheet Topic: GOVERNMENT BUDGET
1. Which of the following statements is correct about government spending?
a. When a government spends more than it can collect as revenue, it incurs a revenue
expenditure.
b. When a government spends more than it can collect as revenue, it incurs a capital expenditure.
c. When a government spends more than it can collect as revenue, it incurs a budget deficit.
d. When a government spends more than it can collect as revenue, it incurs a budget surplus.
2. Spot the capital receipt.
a. Tax received
b. External grant received
c. Dividend received
d. Disinvestment
3. Fiscal deficit in a Government budget refers to:
a. Shortfall in taxes
b. Shortfall in disinvestment
c. Disinvestment requirement
d. Borrowings requirement
4. Primary deficit in Government budget will be zero when….
a. Revenue deficit is zero
b. Net interest payments are zero.
c. Fiscal deficit is zero
d. Fiscal deficit is equal to interest payment
5. What is the duration of a financial year?
a. October 1st to September 30th
b. January 1st to December 30th
c. April 1st to March 30th
d. None of the above
6. What is the name of the process under which the government starts to sell its securities to the
private sector?
a. Disinvestment
b. Monetary expansion
c. Open market operations
d. All of the above
7. Which of the following statements is true about the fiscal deficit?
a. The fiscal deficit is financed through primary deficit
b. The fiscal deficit is financed through revenue deficit
c. The fiscal deficit is financed through borrowings
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d. The fiscal deficit is financed through taxes
8. Which of the following statements is true about an unbalanced budget?
a. In an unbalanced budget, the expenditure is relatively higher than income
b. In an unbalanced budget, the income is greater than the expenditure
c. In an unbalanced budget, the deficit gets covered either by loans or by printing notes
d. Only a and c are correct
9. Which of the following statements about the capital budget is accurate?
a. The capital budget consists of direct and indirect tax
b. The capital budget consists of capital expenditure and capital receipts
c. The capital budget consists of revenue expenditure and revenue receipts
d. The capital budget consists of direct taxes
Reason-Based questions: State true/False:
1. Revenue receipts do not impact asset and liability status of the Government.
2. Balanced budget is the budget in which revenue receipts=revenue expenditures.
3. Capital receipts add to liabilities of the government.
4. Loans offered by the central government to the state Governments can be treated as capital
expenditures by the central government.
Numericals:
1. Find borrowing by the Government if payment of interest is estimated to be Rs 15000 crores.
2. Revenue deficit is estimated to be Rs 20000 crores and borrowing is estimated to be Rs 15000
crores. If expenditure on interest payment is estimated to be 50% of the revenue deficit, find fiscal
deficit and primary deficit.
Assertion Reason Based questions:
Read the following statements: Assertion (A) and Reason (R). Choose one of the correct
alternatives given below:
Alternatives:
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.
1. Assertion (A): The government has allocated extra money in Budget 2021 to provide safe
drinking water facilities and sanitation to the people.
Reason (R): The government does it because sanitation and providing drinking water are
public goods.
2. Assertion (A): The impact and incidence of indirect tax lie on different persons
Reason (R): Indirect Taxes can be avoided by not entering into those transactions, which
call for such taxes.
3. Assertion (A): Expenditure on Ujjwala Yojana launched by the Government is an example
of revenue expenditure.
Reason (R): It is the expenditure that neither created assets nor reduced liabilities of the
Government.
4. Assertion (A): The government budget is an important monetary policy instrument.
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Reason (R): Government budget is a financial statement of budgetary receipts and budgetary
expenditure of the government during a fiscal year.
Case-Based questions:
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