Prof.

Yogesh Ojha
Practice Worksheet

GOVERNMENT BUDGET & ECONOMY

Class 12 - Economics

1. What are revenue receipts in a government budget? [2]

2. What is meant by revenue deficit? [2]
3. What one step can be taken to reduce inequalities in income by provision in government budget? [2]
4. What is the non-development expenditure? [2]
5. A government budget shows a primary deficit of ₹ 4,400 crore. The revenue expenditure on interest payment is ₹ [2]
400 crore. How much is the fiscal deficit?

E
6. Give any two examples of revenue expenditure. [2]

R
7. Are grants given by the central government to the state governments' capital expenditures? [2]
8. What is revenue deficit ? Mention any one implication of revenue deficit? Why Indian budget faces revenue [2]

9.
deficit?
What does fiscal deficit represent?
DO [2]
10. Classify the following into revenue expenditure and capital expenditure: [2]
IN
i. Subsidies
ii. Grants given to social organisations.
11. Name any one step that the government can take through its budget to check inflation that is causing hardships [2]
to the people.
E,

12. Why are borrowing a capital receipt? [2]

13. Why is the disinvestment of the public sector undertakings a capital receipt? [2]
C

14. What is revenue deficit in government budget? [2]

PA

15. What is ‘primary deficit’? [2]

16. How does the government reduce inequalities of income and wealth? [2]
17. Define Balanced Budget. [2]
18. Mention two parts of a budget. [2]
19. Define plan expenditure. [2]
20. Suppose you are a member of the Advisory Committee to the Finance Minister of India. The finance Minister [2]
is concerned about the rising Revenue Deficit in the budget.
Suggest any one measure to control the rising Revenue deficit of the government.
21. What type of tax is helpful in reducing inequalities? [2]
22. What is budget? [2]
23. Which government is empowered to tax incomes? [2]
24. Define development expenditure. [2]
25. What is the implication of fiscal deficit? [2]
26. What one step can be taken through market to reduce the consumption of a product harmful for health? [2]
27. What is the role of Government Budget in allocation of resources? [2]

1/5
For any queries Whatsapp at +91 62661-95454
28. What is meant by public revenue? [2]
29. Give two examples of capital receipts in a government budget. [2]
30. Define revenue receipts. [2]
31. Explain why the tax multiplier is smaller in absolute value than the government expenditure multiplier. [3]
32. What is debt trap? Suggest measures to control such situation. [3]
33. Explain briefly any two objectives of a government budget. [3]
34. What is the importance of government budget? [3]
35. Read the given highlights of lndia budget 2010-11 and answer the following questions: [3]
India plans to borrow $100 billion from the World Bank to Finance the Fiscal deficit.
There is expected increase in the tax collection by 5%.
The defense expenditure has increased from 12 to 14% of the total budget.
The spending on social sector has increased and is now 37% of total plan outlay.
Plan allocation for school education increased by 16%.
i. What is fiscal deficit ? Mention any two implications of fiscal deficit ?

E
ii. How we as a good citizen can help in reducing the fiscal deficit ?
iii. Basic objective of the government budget is social welfare. Identify any two expenditure which will lead to

R
social welfare.

36.
DO
iv. Whether borrowing from the World Bank is a revenue expenditure or a capital expenditure. Justify.
From the following data about a government budget, find out the following: [3]
i. Revenue deficit
ii. Fiscal deficit
IN

iii. Primary deficit

S.no. Contents (Rs. in arab)

E,

(a) Capital Receipts Net of Borrowings 95

(b) Revenue Expenditure 100

C

(c) Interest Payments 10

PA

(d) Revenue Receipts 80

(e) Capital Expenditure 110

37. Under which situations deficit budget is beneficial for the economy. [3]
38. What is indirect tax? Give four examples of indirect tax. [3]
39. A large fiscal deficit leads to a higher revenue deficit in future. Do you agree with the statement? Give [3]
reasons in support of your answer.
40. A person claims that he should be exempted from tax payment as he does not use any government services in [3]
general. Should the person be allowed to do so?
41. Distinguish between revenue expenditure and capital expenditure in a government budget. Give an example of [3]
each.
42. Is loan granted by the Central Government to a State Government, a revenue expenditure or capital expenditure? [3]
Why?
43. Explain the meaning and implications of revenue deficit. [3]
44. Giving reasons, categorise the following into revenue receipts and capital receipts: [3]

2/5
For any queries Whatsapp at +91 62661-95454
 i. Recovery of loans
ii. Corporation tax
iii. Dividends on investments made by government
iv. (Sale of a public sector undertaking.
45. India is suffering from the problem of fiscal deficit for the last many years. Explain any two steps to deal with [3]
such a problem.
46. Why are subsidies treated as a revenue expenditure? [3]
47. Give the meaning of revenue deficit, fiscal deficit and primary deficit. [3]
48. In the government of a country’s budget, the Finance Minister proposed to raise the excise duty on cigarettes. He [3]
also proposed to increase income tax on individuals earning more than ₹ one crore per annum. Is the objective
only to earn revenue for the government? What possible welfare objective can you think of from these
proposals? Explain.
49. Discuss briefly, how the Government budget can be used as an effective tool in the process of employment [3]
generation.

E
50. What is tax? Why we should pay taxes? Mention any two ways through which people can be encouraged to pay [3]
taxes.

R
51. Explain the impact of non-maintenance of fiscal discipline in an economy. [3]
52.
53.
Explain any one objective of government budget.
State the measures to reduce revenue deficit.
DO [3]
[3]
54. Suggest different ways by which capital budget deficit can be reduced without borrowings. [3]
55. Explain the "Reallocation of resources" objective of a government budget. [3]
IN
56. What do you mean by primary deficit? Explain its implications. [3]
57. Briefly explain any three non-tax revenue of the government. [3]
58. Giving reasons classify the following into direct and indirect tax: [3]
E,

i. Personal income tax

ii. Goods and services tax
C

iii. Corporation tax

PA

59. From the following data about a government budget calculate Primary deficit: [3]

S. No. Items (₹ in arab)

(i) Revenue deficit 40

(ii) Non-debt creating capital receipts 190

(iii) Tax revenue 125

(iv) Capital expenditure 220

(v) Interest payments 20

60. From the following data, calculate [3]

a. Revenue deficit and
b. Fiscal deficit

Particulars Amount (in ₹ crores)

(i) Non- tax Revenue 2,000

3/5
For any queries Whatsapp at +91 62661-95454
 (ii) Tax Revenue 1,200

(iii) Recovery of Loans 145

(iv) Other Revenue Expenditure 2,630

(v) Capital Expenditure 500

(vi) PSU Disinvestment 120

(vii) Interest Payments 1,070

61. Distinguish between revenue expenditure and capital expenditure with an example of each. [3]
62. Explain the basis of classifying government receipts into revenue receipts and capital receipts. Which type of [3]
these receipts are ‘borrowings by government’ and why?
63. From the following data about a government budget, find out the following: [3]
i. Revenue deficit
ii. Fiscal deficit

RE
iii. Primary deficit

(Rs. Arab)

(i) Capital receipt net of borrowings DO 95

(ii) Revenue expenditure 100

(iii) Interest payments 10

IN
(iv) Revenue receipts 80

(v) Capital expenditure 110

64. Giving reason, state whether the following is a revenue expenditure or a capital expenditure in a government [3]
,
CE

budget
i. Expenditure on scholarships
ii. Expenditure on building a bridge
PA

65. Distinguish between revenue receipts and capital receipts with the help of example: [3]
66. What is the government budget? Give the meaning of: [3]
a. Revenue deficit
b. Fiscal deficit
67. Classify the following receipts into revenue receipts and capital receipts. Give reasons in support of your answer. [3]
i. Recovery of loans.
ii. Interest received on loans.
68. Categorise the following government receipts into revenue and capital receipts. Give reasons for your answer. [3]
a. Receipts from sale of shares of a public sector undertaking.
b. Borrowings from public.
c. Profits of public sector undertakings.
d. Income tax received by government.
69. Giving reasons, classify the following into direct and indirect tax. [3]
i. Wealth tax

4/5
For any queries Whatsapp at +91 62661-95454
 ii. Value added tax
70. How progressive tax structure can help in reducing inequality of income? [3]
71. Explain the capital receipts in a government budget with appropriate examples. [3]
72. Give meanings of revenue receipts and capital expenditures with one example for each. [3]
73. Give meanings of revenue expenditures and capital receipts in a government budget. Give one example of each. [3]
74. From the following data about a government budget, find [3]
i. Revenue deficit
ii. Fiscal deficit
iii. Primary deficit

S.no. Contents (Rs. in arab)

(a) Tax Revenue 47

(b) Capital Receipts 34

(c) Non-tax Revenue 10

E
(d) Borrowings 32

R
(e) Revenue Expenditures 80

(f) Interest Payments

DO 20

75. Explain the concept of capital expenditure in a government budget with the examples. [3]
, IN
CE
PA

5/5
For any queries Whatsapp at +91 62661-95454