Question : Which budget should be adopted by government in case of moderate inflation.
Option 1: Deficit budget
Option 2: Surplus budget
Option 3: Balanced Budget
Option 4: Revenue Budget
Correct Answer: Balanced Budget
Solution : The correct answer is (c) Balanced Budget.
A balanced budget means that the government's total revenue equals its total expenditure. In this budget, the government's income from various sources, such as taxes, fees, and other revenue streams, matches its spending on public goods and services, welfare programs, infrastructure development, and other expenditures.
Adopting a balanced budget helps ensure fiscal discipline and stability in the economy. In the context of moderate inflation, a balanced budget helps prevent excessive government spending, which can contribute to inflationary pressures. By aligning revenue and expenditure, the government avoids creating additional demand in the economy, which can potentially exacerbate inflation.
Question : What is the difference between a balanced budget and a surplus budget?
Option 1: A balanced budget has equal spending and revenue, while a surplus budget has more revenue than spending
Option 2: A balanced budget has more spending than revenue, while a surplus budget has equal spending and revenue
Option 3: A balanced budget has more revenue than spending, while a surplus budget has equal spending and revenue
Option 4: A balanced budget has equal spending and revenue, while a surplus budget has more spending than revenue
Question : Which of the following is a measure of the size of the government budget?
Option 1: Fiscal deficit
Option 2: Revenue deficit
Option 3: Capital receipts
Option 4: Revenue deficit
Question : A government budget that includes provisions for an economic downturn is known as:
Option 1: A countercyclical budget
Option 2: A balanced budget
Option 3: A deficit budget
Option 4: A surplus budget
Question : In case of inflationary situation in the economy government prepares?
Option 1: Deficit Budget
Option 2: Surplus Budget
Option 3: Both (a) and (b)
Option 4: None
Question : What is the difference between a budget deficit and a national debt?
Option 1: A budget deficit is the difference between government spending and revenue in a given year, while the national debt is the accumulation of all previous deficits
Option 2: A national debt is the difference between government spending and revenue in a given year, while a budget deficit is the accumulation of all previous deficits
Option 3: A budget deficit is a surplus in government spending, while a national debt is a deficit in government spending
Option 4: A national debt is a surplus in government spending, while a budget deficit is a deficit in government spending
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