Government Finance
✅ A) Income and expenditure of government
B) Private household finance
C) Corporate finance only
D) None of the above
Explanation: Public finance studies government revenue, expenditure, and debt.
Q2. The primary objective of public finance is:
✅ A) Allocation of resources for social welfare
B) Maximizing private profit
C) Random allocation
D) None of the above
Explanation: Public finance ensures welfare through efficient resource use.
Q3. Principle of maximum social advantage was given by:
✅ A) Dalton
B) Keynes
C) Adam Smith
D) Ricardo
Explanation: Dalton emphasized balancing revenue and expenditure for welfare.
Q4. Public revenue includes:
✅ A) Taxes, fees, fines, grants
B) Only taxes
C) Only loans
D) None of the above
Explanation: Revenue sources include compulsory and non‑compulsory payments.
Q5. Public expenditure refers to:
✅ A) Spending by government on goods, services, welfare
B) Household spending
C) Corporate spending
D) None of the above
Explanation: It covers all government spending.
Q6. Public debt is:
✅ A) Borrowings of government from internal and external sources
B) Household debt
C) Corporate debt
D) None of the above
Explanation: Public debt finances deficits.
Q7. Fiscal policy refers to:
✅ A) Government use of taxation and expenditure to influence economy
B) Monetary policy only
C) Trade policy only
D) None of the above
Explanation: Fiscal policy manages demand and growth.
Q8. Budget is:
✅ A) Annual statement of government’s revenue and expenditure
B) Household plan
C) Corporate plan
D) None of the above
Explanation: Budget is presented annually in Parliament.
Q9. Revenue budget includes:
✅ A) Revenue receipts and revenue expenditure
B) Capital receipts only
C) Capital expenditure only
D) None of the above
Explanation: Revenue budget covers current income and spending.
Q10. Capital budget includes:
✅ A) Capital receipts and capital expenditure
B) Revenue receipts only
C) Revenue expenditure only
D) None of the above
Explanation: Capital budget covers loans, investments, asset creation.
Q11. Fiscal deficit means:
✅ A) Total expenditure – total revenue (excluding borrowings)
B) Revenue deficit only
C) Balanced budget
D) None of the above
Explanation: Fiscal deficit shows borrowing needs.
Q12. Revenue deficit means:
✅ A) Revenue expenditure > revenue receipts
B) Capital expenditure > capital receipts
C) Balanced budget
D) None of the above
Explanation: It shows shortfall in revenue account.
Q13. Primary deficit =
✅ A) Fiscal deficit – interest payments
B) Fiscal deficit + interest payments
C) Revenue deficit – interest payments
D) None of the above
Explanation: Primary deficit excludes interest burden.
Q14. Effective revenue deficit =
✅ A) Revenue deficit – grants for capital creation
B) Fiscal deficit – grants
C) Capital deficit only
D) None of the above
Explanation: It adjusts for productive grants.
Q15. Budgetary deficit =
✅ A) Total expenditure – total receipts (including borrowings)
B) Revenue deficit only
C) Capital deficit only
D) None of the above
Explanation: It is broader than fiscal deficit.
Q16. Fiscal Responsibility and Budget Management (FRBM) Act aims at:
✅ A) Ensuring fiscal discipline and reducing deficits
B) Increasing deficits
C) Random allocation
D) None of the above
Explanation: FRBM promotes responsible fiscal management.
Q17. Zero‑based budgeting means:
✅ A) Every expenditure must be justified from scratch
B) Incremental budgeting only
C) Balanced budget
D) None of the above
Explanation: ZBB starts from zero base each year.
Q18. Performance budgeting focuses on:
✅ A) Linking expenditure with outcomes
B) Random allocation
C) Only revenue
D) None of the above
Explanation: It measures efficiency of spending.
Q19. Gender budgeting focuses on:
✅ A) Allocating resources for gender equality
B) Random allocation
C) Only revenue
D) None of the above
Explanation: Gender budgeting promotes inclusivity.
Q20. Deficit financing means:
✅ A) Financing deficit through borrowing or printing money
B) Balanced budget
C) Surplus financing
D) None of the above
Explanation: It bridges gap between expenditure and revenue.
Q21. Public goods are:
✅ A) Non‑excludable and non‑rivalrous goods
B) Private goods only
C) Club goods only
D) None of the above
Explanation: Public goods like defense benefit all.
Q22. Merit goods are:
✅ A) Goods with positive externalities (education, health)
B) Private goods only
C) Random goods
D) None of the above
Explanation: Merit goods are socially desirable.
Q23. Demerit goods are:
✅ A) Goods with negative externalities (alcohol, tobacco)
B) Merit goods only
C) Public goods only
D) None of the above
Explanation: Demerit goods harm society.
Q24. Transfer payments are:
✅ A) Payments without exchange of goods/services (pensions, subsidies)
B) Payments for goods only
C) Payments for services only
D) None of the above
Explanation: Transfers redistribute income.
Q25. Stabilization function of public finance means:
✅ A) Maintaining economic stability through fiscal policy
B) Random allocation
C) Only growth
D) None of the above
Explanation: Stabilization ensures steady growth and employment.
Q26. The Union Budget in India is presented by:
✅ A) Finance Minister
B) Prime Minister
C) RBI Governor
D) None of the above
Explanation: The Finance Minister presents the annual budget in Parliament.
Q27. The Union Budget is presented in:
✅ A) Lok Sabha
B) Rajya Sabha
C) Both Houses simultaneously
D) None of the above
Explanation: Budget is laid before Lok Sabha first.
Q28. The Railway Budget was merged with Union Budget in:
✅ A) 2017
B) 2015
C) 2019
D) 2020
Explanation: Railway Budget was merged in 2017.
Q29. Vote on Account allows:
✅ A) Government to withdraw funds until budget is passed
B) Permanent approval of budget
C) Only capital expenditure
D) None of the above
Explanation: Vote on Account ensures continuity of expenditure.
Q30. Interim Budget is presented:
✅ A) Before general elections
B) Every year
C) Only in recession
D) None of the above
Explanation: Interim budget is temporary until new government forms.
Q31. Finance Bill contains:
✅ A) Proposals for taxation changes
B) Expenditure only
C) Revenue only
D) None of the above
Explanation: Finance Bill enacts tax proposals.
Q32. Appropriation Bill authorizes:
✅ A) Withdrawal of money from Consolidated Fund of India
B) Raising of taxes
C) Printing of currency
D) None of the above
Explanation: Appropriation Bill legalizes expenditure.
Q33. Consolidated Fund of India includes:
✅ A) All revenues, loans, and receipts of government
B) Contingency Fund only
C) Public Account only
D) None of the above
Explanation: It is the main government fund.
Q34. Contingency Fund of India is used for:
✅ A) Emergency expenditure
B) Routine expenditure
C) Capital expenditure only
D) None of the above
Explanation: It meets unforeseen expenses.
Q35. Public Account of India includes:
✅ A) Transactions where government acts as banker (PF, small savings)
B) Consolidated Fund only
C) Contingency Fund only
D) None of the above
Explanation: Public Account holds money not belonging to government.
Q36. Fiscal policy aims at:
✅ A) Stabilization, growth, redistribution
B) Only stabilization
C) Only redistribution
D) None of the above
Explanation: Fiscal policy balances multiple objectives.
Q37. Counter‑cyclical fiscal policy means:
✅ A) Government acts opposite to business cycle
B) Government follows business cycle
C) Random allocation
D) None of the above
Explanation: Expansion in recession, contraction in boom.
Q38. Progressive taxation means:
✅ A) Tax rate increases with income
B) Tax rate decreases with income
C) Same tax rate for all
D) None of the above
Explanation: Progressive tax ensures equity.
Q39. Regressive taxation means:
✅ A) Tax rate decreases with income
B) Tax rate increases with income
C) Same tax rate for all
D) None of the above
Explanation: Regressive tax burdens poor more.
Q40. Proportional taxation means:
✅ A) Same tax rate for all income levels
B) Tax rate increases with income
C) Tax rate decreases with income
D) None of the above
Explanation: Proportional tax maintains constant rate.
Q41. Direct taxes include:
✅ A) Income tax, corporate tax, wealth tax
B) GST
C) Customs duty
D) None of the above
Explanation: Direct taxes are levied on income/wealth.
Q42. Indirect taxes include:
✅ A) GST, customs, excise
B) Income tax
C) Corporate tax
D) None of the above
Explanation: Indirect taxes are levied on goods/services.
Q43. GST was introduced in India in:
✅ A) 2017
B) 2015
C) 2019
D) 2020
Explanation: GST came into effect on 1 July 2017.
Q44. GST Council is chaired by:
✅ A) Union Finance Minister
B) Prime Minister
C) RBI Governor
D) None of the above
Explanation: Finance Minister heads GST Council.
Q45. GST has how many slabs in India?
✅ A) 5 (0%, 5%, 12%, 18%, 28%)
B) 3
C) 4
D) None of the above
Explanation: GST has five main slabs.
Q46. Fiscal consolidation means:
✅ A) Reducing fiscal deficit and debt
B) Increasing deficit
C) Random allocation
D) None of the above
Explanation: Consolidation ensures fiscal discipline.
Q47. Fiscal stimulus means:
✅ A) Increasing spending or reducing taxes to boost demand
B) Reducing spending
C) Increasing taxes
D) None of the above
Explanation: Stimulus supports growth.
Q48. Crowding out effect occurs when:
✅ A) Government borrowing reduces private investment
B) Government borrowing increases private investment
C) Random allocation
D) None of the above
Explanation: Borrowing raises interest rates, reducing private investment.
Q49. Fiscal drag refers to:
✅ A) Higher taxes reducing disposable income and demand
B) Lower taxes increasing demand
C) Random allocation
D) None of the above
Explanation: Fiscal drag slows economic activity.
Q50. Overall, Budgeting & Fiscal Policy principles aim at:
✅ A) Managing revenue, expenditure, taxation, and deficits for stability and growth
B) Random allocation
C) Only taxation
D) None of the above
Explanation: Fiscal policy balances growth, equity, and stability.
Q51. Direct taxes are levied on:
✅ A) Income and wealth of individuals/firms
B) Goods and services
C) Imports only
D) None of the above
Explanation: Direct taxes fall directly on taxpayers.
Q52. Indirect taxes are levied on:
✅ A) Goods and services, collected from consumers via producers
B) Income only
C) Wealth only
D) None of the above
Explanation: Indirect taxes are passed on to consumers.
Q53. Income tax in India is governed by:
✅ A) Income Tax Act, 1961
B) Companies Act, 2013
C) GST Act, 2017
D) None of the above
Explanation: Income tax provisions are under IT Act, 1961.
Q54. Corporate tax is levied on:
✅ A) Profits of companies
B) Salaries of employees
C) Imports only
D) None of the above
Explanation: Corporate tax applies to company profits.
Q55. Customs duty is levied on:
✅ A) Imports and exports
B) Domestic goods only
C) Services only
D) None of the above
Explanation: Customs duty regulates trade flows.
Q56. Excise duty was replaced by:
✅ A) GST
B) Income tax
C) Corporate tax
D) None of the above
Explanation: GST subsumed excise duty on most goods.
Q57. GST is a:
✅ A) Destination-based indirect tax
B) Origin-based tax
C) Direct tax
D) None of the above
Explanation: GST is levied at point of consumption.
Q58. GST in India is a:
✅ A) Dual system (CGST + SGST)
B) Single national tax
C) Only state tax
D) None of the above
Explanation: Both Centre and States levy GST.
Q59. IGST applies to:
✅ A) Inter-state supply of goods and services
B) Intra-state supply
C) Imports only
D) None of the above
Explanation: IGST is levied on inter-state transactions.
Q60. CGST applies to:
✅ A) Intra-state supply (Central share)
B) Inter-state supply
C) Imports only
D) None of the above
Explanation: CGST is levied by Centre on intra-state supply.
Q61. SGST applies to:
✅ A) Intra-state supply (State share)
B) Inter-state supply
C) Imports only
D) None of the above
Explanation: SGST is levied by States on intra-state supply.
Q62. GST Council decisions require:
✅ A) 75% majority of weighted votes
B) Simple majority
C) Unanimous consent
D) None of the above
Explanation: Weighted voting ensures balance between Centre and States.
Q63. GST compensation cess is levied to:
✅ A) Compensate states for revenue loss
B) Fund central schemes only
C) Finance imports
D) None of the above
Explanation: Compensation cess supports states post-GST rollout.
Q64. Input tax credit under GST allows:
✅ A) Businesses to offset tax paid on inputs against output tax
B) Refund of income tax
C) Refund of customs duty
D) None of the above
Explanation: ITC prevents cascading of taxes.
Q65. GST threshold exemption limit for businesses is:
✅ A) ₹40 lakh (goods), ₹20 lakh (services)
B) ₹10 lakh
C) ₹50 lakh
D) None of the above
Explanation: Small businesses below threshold are exempt.
Q66. Composition scheme under GST is for:
✅ A) Small taxpayers with turnover up to ₹1.5 crore
B) Large corporations
C) Exporters only
D) None of the above
Explanation: Composition scheme simplifies compliance.
Q67. Direct tax reforms in India are overseen by:
✅ A) CBDT (Central Board of Direct Taxes)
B) CBIC
C) RBI
D) None of the above
Explanation: CBDT manages direct tax administration.
Q68. Indirect tax reforms in India are overseen by:
✅ A) CBIC (Central Board of Indirect Taxes & Customs)
B) CBDT
C) SEBI
D) None of the above
Explanation: CBIC manages GST, customs, excise.
Q69. Tax incidence refers to:
✅ A) Who ultimately bears the burden of tax
B) Who collects the tax
C) Who legislates the tax
D) None of the above
Explanation: Incidence shows distribution of tax burden.
Q70. Tax shifting occurs when:
✅ A) Burden of tax is passed from one party to another
B) Tax is paid directly
C) Tax is refunded
D) None of the above
Explanation: Indirect taxes are shifted to consumers.
Q71. Tax evasion means:
✅ A) Illegal non-payment or underpayment of taxes
B) Legal tax planning
C) Tax compliance
D) None of the above
Explanation: Evasion is unlawful avoidance.
Q72. Tax avoidance means:
✅ A) Legal use of loopholes to reduce tax liability
B) Illegal evasion
C) Random compliance
D) None of the above
Explanation: Avoidance is legal but undesirable.
Q73. Double taxation occurs when:
✅ A) Same income is taxed twice in different jurisdictions
B) Tax is paid once
C) Tax is refunded
D) None of the above
Explanation: Double taxation treaties prevent this.
Q74. Minimum Alternate Tax (MAT) applies to:
✅ A) Companies with zero taxable income but book profits
B) Individuals only
C) Imports only
D) None of the above
Explanation: MAT ensures companies pay minimum tax.
Q75. Overall, Taxation principles aim at:
✅ A) Raising revenue, ensuring equity, efficiency, and compliance
B) Random allocation
C) Only expenditure
D) None of the above
Explanation: Taxation balances revenue and fairness.
Q76. Tax buoyancy refers to:
✅ A) Responsiveness of tax revenue to GDP growth
B) Responsiveness of GDP to tax growth
C) Random allocation
D) None of the above
Explanation: Buoyancy shows how tax revenue grows with economy.
Q77. Tax elasticity refers to:
✅ A) Responsiveness of tax revenue to changes in tax rate
B) Responsiveness of GDP to tax rate
C) Random allocation
D) None of the above
Explanation: Elasticity measures effect of rate changes.
Q78. Direct Tax Code (DTC) was proposed to:
✅ A) Simplify and modernize direct tax laws
B) Replace GST
C) Replace customs duty
D) None of the above
Explanation: DTC aimed at reforming income tax structure.
Q79. Tax neutrality means:
✅ A) Taxes should not distort economic decisions
B) Taxes should encourage specific sectors only
C) Taxes should be regressive
D) None of the above
Explanation: Neutrality ensures efficiency.
Q80. Tax equity principle means:
✅ A) Fair distribution of tax burden
B) Equal tax for all
C) Random allocation
D) None of the above
Explanation: Equity balances ability to pay.
Q81. GST replaced how many indirect taxes?
✅ A) Multiple central and state taxes (excise, VAT, service tax)
B) Only income tax
C) Only corporate tax
D) None of the above
Explanation: GST unified indirect taxation.
Q82. GST is levied on:
✅ A) Supply of goods and services
B) Only goods
C) Only services
D) None of the above
Explanation: GST applies to both goods and services.
Q83. GST is a value‑added tax because:
✅ A) Tax is levied only on value addition at each stage
B) Tax is levied on total value
C) Tax is levied randomly
D) None of the above
Explanation: ITC ensures tax on value addition only.
Q84. GST returns are filed:
✅ A) Monthly/quarterly depending on turnover
B) Annually only
C) Daily
D) None of the above
Explanation: Compliance depends on turnover.
Q85. GST e‑way bill is required for:
✅ A) Movement of goods above threshold value
B) All goods irrespective of value
C) Services only
D) None of the above
Explanation: E‑way bill tracks goods movement.
Q86. GST anti‑profiteering authority ensures:
✅ A) Benefits of tax reduction passed to consumers
B) Higher profits for firms
C) Random allocation
D) None of the above
Explanation: Authority prevents unfair pricing.
Q87. GST compensation to states is guaranteed for:
✅ A) 5 years from rollout (2017–2022)
B) 10 years
C) 3 years
D) None of the above
Explanation: Compensation period was 5 years.
Q88. GST is administered by:
✅ A) CBIC (Central Board of Indirect Taxes & Customs)
B) CBDT
C) RBI
D) None of the above
Explanation: CBIC manages GST compliance.
Q89. Place of supply rules under GST determine:
✅ A) Which state gets tax revenue
B) Which company pays tax
C) Which consumer pays tax
D) None of the above
Explanation: Place of supply allocates revenue.
Q90. Reverse charge mechanism under GST means:
✅ A) Tax liability shifts from supplier to recipient
B) Tax liability remains with supplier
C) Tax liability shifts to government
D) None of the above
Explanation: Reverse charge applies in specific cases.
Q91. GST input credit chain breaks when:
✅ A) Supplier fails to pay tax
B) Consumer fails to pay tax
C) Government fails to collect tax
D) None of the above
Explanation: ITC depends on supplier compliance.
Q92. GST promotes:
✅ A) One nation, one tax system
B) Multiple overlapping taxes
C) Random allocation
D) None of the above
Explanation: GST unified indirect taxation.
Q93. GST slabs are periodically revised by:
✅ A) GST Council
B) RBI
C) SEBI
D) None of the above
Explanation: GST Council decides slab changes.
Q94. GST has improved:
✅ A) Ease of doing business and tax compliance
B) Only government revenue
C) Only exports
D) None of the above
Explanation: GST simplified tax structure.
Q95. GST challenges include:
✅ A) Compliance burden, IT glitches, revenue shortfall
B) No challenges
C) Only exports
D) None of the above
Explanation: Implementation faced hurdles.
Q96. GST is considered:
✅ A) Landmark tax reform in India
B) Minor reform
C) Random allocation
D) None of the above
Explanation: GST unified indirect tax system.
Q97. GST Council includes:
✅ A) Union Finance Minister + State Finance Ministers
B) Prime Minister only
C) RBI Governor only
D) None of the above
Explanation: Council ensures cooperative federalism.
Q98. GST revenue is shared between:
✅ A) Centre and States
B) Centre only
C) States only
D) None of the above
Explanation: Dual GST system shares revenue.
Q99. GST has subsumed:
✅ A) Excise duty, service tax, VAT, entry tax
B) Income tax
C) Corporate tax
D) None of the above
Explanation: GST replaced multiple indirect taxes.
Q100. Overall, GST reforms aim at:
✅ A) Simplifying tax structure, reducing cascading, promoting efficiency
B) Increasing complexity
C) Random allocation
D) None of the above
Explanation: GST reforms modernized India’s tax system.
Q101. Public expenditure refers to:
✅ A) Spending by government on goods, services, welfare
B) Household spending
C) Corporate spending
D) None of the above
Explanation: It covers all government spending for public welfare.
Q102. Revenue expenditure includes:
✅ A) Salaries, subsidies, pensions, interest payments
B) Asset creation
C) Loan repayment
D) None of the above
Explanation: Revenue expenditure is recurring and non‑asset creating.
Q103. Capital expenditure includes:
✅ A) Asset creation, loans to states, investments
B) Salaries only
C) Subsidies only
D) None of the above
Explanation: Capital expenditure builds long‑term assets.
Q104. Development expenditure refers to:
✅ A) Spending on education, health, infrastructure
B) Defense only
C) Interest payments only
D) None of the above
Explanation: Development expenditure promotes growth.
Q105. Non‑development expenditure refers to:
✅ A) Defense, subsidies, pensions, interest payments
B) Education only
C) Infrastructure only
D) None of the above
Explanation: Non‑development expenditure does not directly promote growth.
Q106. Subsidies are classified as:
✅ A) Revenue expenditure
B) Capital expenditure
C) Development expenditure only
D) None of the above
Explanation: Subsidies are recurring transfers.
Q107. Grants‑in‑aid to states are:
✅ A) Revenue expenditure
B) Capital expenditure
C) Development expenditure only
D) None of the above
Explanation: Grants are transfers without repayment.
Q108. Public revenue includes:
✅ A) Taxes, fees, fines, grants, borrowings
B) Only taxes
C) Only borrowings
D) None of the above
Explanation: Revenue sources include compulsory and non‑compulsory payments.
Q109. Tax revenue is:
✅ A) Compulsory payments like income tax, GST, customs
B) Voluntary donations
C) Borrowings only
D) None of the above
Explanation: Tax revenue is mandatory.
Q110. Non‑tax revenue includes:
✅ A) Fees, fines, dividends, interest, grants
B) Income tax
C) GST
D) None of the above
Explanation: Non‑tax revenue supplements taxes.
Q111. Public debt is classified into:
✅ A) Internal debt and external debt
B) Revenue and capital debt
C) Tax and non‑tax debt
D) None of the above
Explanation: Internal debt is domestic, external is foreign.
Q112. Internal debt includes:
✅ A) Borrowings from RBI, banks, public
B) Loans from foreign countries
C) Grants only
D) None of the above
Explanation: Internal debt is raised domestically.
Q113. External debt includes:
✅ A) Loans from foreign governments and institutions
B) Domestic borrowings
C) Taxes only
D) None of the above
Explanation: External debt is raised abroad.
Q114. Public debt burden refers to:
✅ A) Pressure of repayment and interest on economy
B) Tax burden only
C) Subsidy burden only
D) None of the above
Explanation: Debt burden affects fiscal stability.
Q115. Debt servicing means:
✅ A) Payment of interest and principal on public debt
B) Raising new loans
C) Collecting taxes
D) None of the above
Explanation: Servicing ensures debt sustainability.
Q116. Deficit financing often leads to:
✅ A) Inflationary pressures
B) Deflation
C) Random allocation
D) None of the above
Explanation: Printing money increases inflation.
Q117. Public debt is sustainable when:
✅ A) Growth rate > interest rate on debt
B) Interest rate > growth rate
C) Random allocation
D) None of the above
Explanation: Debt is sustainable if economy grows faster.
Q118. Public debt redemption means:
✅ A) Repayment of loans by government
B) Raising new loans
C) Collecting taxes
D) None of the above
Explanation: Redemption reduces outstanding debt.
Q119. Sinking fund is created for:
✅ A) Repayment of public debt
B) Subsidy payments
C) Tax collection
D) None of the above
Explanation: Sinking fund ensures debt repayment.
Q120. Ways and Means Advances (WMA) are:
✅ A) Temporary loans from RBI to government
B) Permanent loans
C) Grants only
D) None of the above
Explanation: WMA bridge short‑term cash needs.
Q121. Public debt management is handled by:
✅ A) RBI
B) SEBI
C) NITI Aayog
D) None of the above
Explanation: RBI manages government debt.
Q122. Public debt ceiling is:
✅ A) Maximum limit of borrowing set by law/policy
B) Minimum borrowing
C) Random allocation
D) None of the above
Explanation: Ceiling ensures fiscal discipline.
Q123. Public debt is justified when:
✅ A) Used for productive investment and growth
B) Used for consumption only
C) Random allocation
D) None of the above
Explanation: Productive debt supports development.
Q124. Excessive public debt leads to:
✅ A) Crowding out, inflation, fiscal stress
B) Growth only
C) Random allocation
D) None of the above
Explanation: High debt burdens economy.
Q125. Overall, Public Expenditure, Revenue & Debt principles aim at:
✅ A) Financing welfare, development, and stability while managing debt sustainably
B) Random allocation
C) Only taxation
D) None of the above
Explanation: Balanced expenditure and debt ensure fiscal health.
Q126. Public debt is classified as:
✅ A) Productive and unproductive debt
B) Revenue and capital debt
C) Tax and non‑tax debt
D) None of the above
Explanation: Productive debt creates assets, unproductive debt does not.
Q127. Voluntary debt refers to:
✅ A) Borrowings raised through public subscription of bonds
B) Taxes only
C) Grants only
D) None of the above
Explanation: Voluntary debt is willingly subscribed by citizens.
Q128. Compulsory debt refers to:
✅ A) Borrowings enforced by law (e.g., forced loans)
B) Voluntary bonds
C) Taxes only
D) None of the above
Explanation: Compulsory debt is legally mandated.
Q129. Internal debt is preferable because:
✅ A) Repayment remains within domestic economy
B) Repayment drains foreign reserves
C) Random allocation
D) None of the above
Explanation: Internal debt does not burden foreign exchange.
Q130. External debt burden is heavier because:
✅ A) Repayment requires foreign currency
B) Repayment remains domestic
C) Random allocation
D) None of the above
Explanation: External debt affects forex reserves.
Q131. Debt trap occurs when:
✅ A) New borrowings are used to repay old debt
B) Debt is repaid easily
C) Debt is cancelled
D) None of the above
Explanation: Debt trap indicates unsustainable borrowing.
Q132. Debt servicing ratio measures:
✅ A) Debt service payments as % of export earnings
B) Debt service payments as % of GDP
C) Debt service payments as % of taxes
D) None of the above
Explanation: It shows burden of external debt.
Q133. Fiscal federalism refers to:
✅ A) Division of financial powers between Centre and States
B) Division of judiciary powers
C) Division of executive powers
D) None of the above
Explanation: Fiscal federalism ensures balanced resource sharing.
Q134. Finance Commission in India is appointed:
✅ A) Every 5 years by President
B) Every 10 years
C) Every 3 years
D) None of the above
Explanation: Finance Commission recommends devolution of resources.
Q135. The 15th Finance Commission covered period:
✅ A) 2021–2026
B) 2015–2020
C) 2010–2015
D) None of the above
Explanation: 15th FC recommendations apply for 2021–26.
Q136. Vertical devolution refers to:
✅ A) Sharing of central taxes between Centre and States
B) Sharing among states
C) Sharing among districts
D) None of the above
Explanation: Vertical devolution divides Centre–State resources.
Q137. Horizontal devolution refers to:
✅ A) Distribution of central taxes among states
B) Distribution between Centre and States
C) Distribution among districts
D) None of the above
Explanation: Horizontal devolution allocates shares to states.
Q138. Criteria for horizontal devolution include:
✅ A) Population, income distance, area, forest cover
B) Only population
C) Only income
D) None of the above
Explanation: Multiple criteria ensure fairness.
Q139. Grants‑in‑aid are recommended by:
✅ A) Finance Commission
B) RBI
C) SEBI
D) None of the above
Explanation: Grants support states with special needs.
Q140. Fiscal transfers aim at:
✅ A) Reducing regional disparities
B) Increasing disparities
C) Random allocation
D) None of the above
Explanation: Transfers promote balanced development.
Q141. Centrally sponsored schemes are:
✅ A) Funded partly by Centre, partly by States
B) Funded only by Centre
C) Funded only by States
D) None of the above
Explanation: CSS involve cost‑sharing.
Q142. Centrally sector schemes are:
✅ A) Fully funded by Centre
B) Funded partly by States
C) Funded only by States
D) None of the above
Explanation: Central sector schemes are 100% funded by Centre.
Q143. Finance Commission recommendations are:
✅ A) Advisory but generally accepted
B) Legally binding
C) Ignored
D) None of the above
Explanation: Recommendations guide fiscal transfers.
Q144. Fiscal decentralization means:
✅ A) Empowering local governments with financial powers
B) Empowering judiciary
C) Empowering executive only
D) None of the above
Explanation: Decentralization strengthens grassroots governance.
Q145. Local bodies receive funds through:
✅ A) State Finance Commissions and grants
B) RBI
C) SEBI
D) None of the above
Explanation: Local bodies are supported by state commissions.
Q146. Fiscal imbalance occurs when:
✅ A) Expenditure responsibilities > revenue powers
B) Revenue powers > expenditure responsibilities
C) Balanced allocation
D) None of the above
Explanation: Imbalance creates resource gaps.
Q147. Vertical fiscal imbalance refers to:
✅ A) Centre having more revenue powers, states more expenditure responsibilities
B) States having more revenue powers
C) Balanced allocation
D) None of the above
Explanation: Vertical imbalance arises from asymmetry.
Q148. Horizontal fiscal imbalance refers to:
✅ A) Differences in revenue capacity among states
B) Differences between Centre and States
C) Balanced allocation
D) None of the above
Explanation: Horizontal imbalance reflects inequality among states.
Q149. Equalization transfers aim at:
✅ A) Ensuring all states can provide comparable public services
B) Increasing disparities
C) Random allocation
D) None of the above
Explanation: Equalization promotes fairness.
Q150. Overall, Public Debt & Fiscal Federalism principles aim at:
✅ A) Managing debt sustainably and ensuring fair resource sharing between Centre and States
B) Random allocation
C) Only taxation
D) None of the above
Explanation: Debt management and federal transfers ensure stability and equity.
Q151. Union Budget is presented annually on:
✅ A) 1st February
B) 31st March
C) 15th August
D) None of the above
Explanation: Since 2017, Budget is presented on 1st February.
Q152. The Economic Survey is released:
✅ A) One day before Union Budget
B) Same day as Budget
C) After Budget
D) None of the above
Explanation: Economic Survey reviews economy before Budget.
Q153. Interim Budget is presented:
✅ A) Before general elections
B) Every year
C) Only in recession
D) None of the above
Explanation: Interim Budget is temporary until new government forms.
Q154. Union Budget 2024–25 focused on:
✅ A) Infrastructure, green energy, digital economy
B) Only defense
C) Only agriculture
D) None of the above
Explanation: Budget emphasized growth and sustainability.
Q155. Fiscal deficit target in Budget 2024–25 was:
✅ A) 5.1% of GDP
B) 3% of GDP
C) 7% of GDP
D) None of the above
Explanation: Government aimed at gradual consolidation.
Q156. Capital expenditure in Budget 2024–25 was:
✅ A) Increased significantly for infrastructure
B) Reduced
C) Constant
D) None of the above
Explanation: Capex was raised to boost growth.
Q157. PM‑Kisan scheme provides:
✅ A) Direct income support to farmers
B) Subsidy on fertilizers only
C) Free seeds only
D) None of the above
Explanation: PM‑Kisan gives ₹6,000 annually to farmers.
Q158. Ayushman Bharat scheme provides:
✅ A) Health insurance coverage up to ₹5 lakh per family
B) Free education
C) Free housing
D) None of the above
Explanation: Ayushman Bharat ensures universal health coverage.
Q159. Jal Jeevan Mission aims at:
✅ A) Providing tap water to all households
B) Providing electricity
C) Providing housing
D) None of the above
Explanation: Jal Jeevan Mission ensures water supply.
Q160. Skill India initiative focuses on:
✅ A) Vocational training and skill development
B) Free healthcare
C) Free housing
D) None of the above
Explanation: Skill India enhances employability.
Q161. Startup India initiative promotes:
✅ A) Entrepreneurship and innovation
B) Imports only
C) Agriculture only
D) None of the above
Explanation: Startup India supports new ventures.
Q162. Digital India initiative promotes:
✅ A) Digital infrastructure, literacy, services
B) Agriculture only
C) Imports only
D) None of the above
Explanation: Digital India enhances digital economy.
Q163. Atmanirbhar Bharat focuses on:
✅ A) Self‑reliance in economy
B) Imports only
C) Services only
D) None of the above
Explanation: Atmanirbhar Bharat promotes domestic production.
Q164. GST reform aimed at:
✅ A) One nation, one tax system
B) Multiple overlapping taxes
C) Random allocation
D) None of the above
Explanation: GST unified indirect taxation.
Q165. FRBM Act aims at:
✅ A) Ensuring fiscal discipline and reducing deficits
B) Increasing deficits
C) Random allocation
D) None of the above
Explanation: FRBM promotes responsible fiscal management.
Q166. Disinvestment policy aims at:
✅ A) Reducing government stake in PSUs
B) Increasing stake in PSUs
C) Random allocation
D) None of the above
Explanation: Disinvestment mobilizes resources and efficiency.
Q167. National Infrastructure Pipeline (NIP) targets:
✅ A) Large investment in infrastructure projects
B) Only agriculture
C) Only defense
D) None of the above
Explanation: NIP boosts infrastructure development.
Q168. Green bonds are issued to:
✅ A) Finance environmentally sustainable projects
B) Finance defense projects
C) Finance random projects
D) None of the above
Explanation: Green bonds support climate goals.
Q169. Sovereign Gold Bonds are issued by:
✅ A) RBI on behalf of Government of India
B) SEBI
C) NITI Aayog
D) None of the above
Explanation: SGBs mobilize savings into gold investments.
Q170. Fiscal stimulus during COVID‑19 included:
✅ A) Direct transfers, credit support, infrastructure push
B) Only tax cuts
C) Only subsidies
D) None of the above
Explanation: Stimulus supported economy during pandemic.
Q171. Contingency Fund of India is used for:
✅ A) Emergency expenditure
B) Routine expenditure
C) Capital expenditure only
D) None of the above
Explanation: It meets unforeseen expenses.
Q172. Public Account of India includes:
✅ A) Transactions where government acts as banker (PF, small savings)
B) Consolidated Fund only
C) Contingency Fund only
D) None of the above
Explanation: Public Account holds money not belonging to government.
Q173. Budget transparency means:
✅ A) Clear disclosure of revenue, expenditure, debt
B) Hiding fiscal data
C) Random allocation
D) None of the above
Explanation: Transparency builds trust.
Q174. Inclusive budgeting focuses on:
✅ A) Allocating resources for marginalized groups
B) Allocating only for rich
C) Random allocation
D) None of the above
Explanation: Inclusive budgeting promotes equity.
Q175. Overall, Current Affairs in Government Finance emphasize:
✅ A) Linking fiscal policy with schemes, reforms, and sustainable growth
B) Random allocation
C) Only taxation
D) None of the above
Explanation: Current affairs connect theory with practice.
Q176. Union Budget is prepared by:
✅ A) Ministry of Finance
B) RBI
C) SEBI
D) None of the above
Explanation: Ministry of Finance drafts and presents the Budget.
Q177. Medium‑term fiscal policy statement is part of:
✅ A) Budget documents under FRBM Act
B) RBI reports
C) SEBI guidelines
D) None of the above
Explanation: FRBM requires medium‑term fiscal targets.
Q178. Fiscal consolidation roadmap aims at:
✅ A) Reducing deficit and debt over time
B) Increasing deficit
C) Random allocation
D) None of the above
Explanation: Roadmap ensures fiscal discipline.
Q179. Disinvestment receipts are classified as:
✅ A) Capital receipts
B) Revenue receipts
C) Tax receipts
D) None of the above
Explanation: Disinvestment mobilizes capital receipts.
Q180. Global public finance institutions include:
✅ A) IMF, World Bank, ADB
B) SEBI, RBI
C) NITI Aayog
D) None of the above
Explanation: IMF, World Bank, ADB provide global finance support.
Q181. IMF provides:
✅ A) Balance of payments support
B) Infrastructure loans only
C) Tax reforms only
D) None of the above
Explanation: IMF stabilizes economies in crisis.
Q182. World Bank provides:
✅ A) Development loans for infrastructure, poverty reduction
B) Balance of payments support
C) Monetary policy
D) None of the above
Explanation: World Bank funds development projects.
Q183. Asian Development Bank (ADB) supports:
✅ A) Development projects in Asia‑Pacific
B) Only Europe
C) Only Africa
D) None of the above
Explanation: ADB promotes regional development.
Q184. Sovereign wealth funds are:
✅ A) State‑owned investment funds from reserves
B) Private mutual funds
C) Household savings
D) None of the above
Explanation: SWFs invest surplus reserves globally.
Q185. Fiscal deficit is financed by:
✅ A) Borrowings, disinvestment, external loans
B) Taxes only
C) Grants only
D) None of the above
Explanation: Deficit financing uses multiple sources.
Q186. Inflationary financing occurs when:
✅ A) Deficit is financed by printing money
B) Deficit is financed by borrowing
C) Deficit is financed by disinvestment
D) None of the above
Explanation: Printing money fuels inflation.
Q187. Primary sources of government revenue are:
✅ A) Taxes and non‑tax revenue
B) Borrowings only
C) Grants only
D) None of the above
Explanation: Taxes are main revenue source.
Q188. Fiscal sustainability means:
✅ A) Government can meet obligations without default or excessive inflation
B) Government defaults
C) Random allocation
D) None of the above
Explanation: Sustainability ensures long‑term stability.
Q189. Global financial crisis of 2008 was triggered by:
✅ A) Collapse of US housing market and subprime loans
B) Oil price shock
C) Random allocation
D) None of the above
Explanation: Subprime mortgage crisis led to global recession.
Q190. India’s fiscal stimulus in 2008–09 included:
✅ A) Tax cuts, increased spending, credit support
B) Only subsidies
C) Only disinvestment
D) None of the above
Explanation: Stimulus cushioned impact of global crisis.
Q191. Fiscal deficit target under FRBM Act is:
✅ A) 3% of GDP
B) 5% of GDP
C) 7% of GDP
D) None of the above
Explanation: FRBM set 3% target for fiscal discipline.
Q192. Revenue deficit target under FRBM Act is:
✅ A) 0% (elimination)
B) 3%
C) 5%
D) None of the above
Explanation: FRBM aimed to eliminate revenue deficit.
Q193. Public debt to GDP ratio indicates:
✅ A) Debt burden relative to economy size
B) Tax burden only
C) Subsidy burden only
D) None of the above
Explanation: Ratio measures sustainability of debt.
Q194. India’s debt‑GDP ratio is around:
✅ A) 80% (combined Centre + States)
B) 30%
C) 50%
D) None of the above
Explanation: India’s debt burden is significant.
Q195. Global debt crisis examples include:
✅ A) Greece (2010s)
B) India (1991)
C) USA (2008)
D) None of the above
Explanation: Greece faced sovereign debt crisis.
Q196. Fiscal transparency is promoted by:
✅ A) Publishing budget documents, audits, disclosures
B) Hiding fiscal data
C) Random allocation
D) None of the above
Explanation: Transparency builds accountability.
Q197. Public finance reforms aim at:
✅ A) Efficiency, equity, sustainability
B) Random allocation
C) Only taxation
D) None of the above
Explanation: Reforms strengthen fiscal system.
Q198. Global tax reforms include:
✅ A) Base erosion and profit shifting (BEPS) initiatives
B) Random allocation
C) Only subsidies
D) None of the above
Explanation: BEPS tackles tax avoidance by multinationals.
Q199. India’s recent fiscal reforms include:
✅ A) GST, FRBM amendments, disinvestment, digital taxation
B) Only subsidies
C) Only grants
D) None of the above
Explanation: Reforms modernized fiscal framework.
Q200. Overall, Government Finance principles aim at:
✅ A) Managing revenue, expenditure, debt, and fiscal transfers for stability and growth
B) Random allocation
C) Only taxation
D) None of the above
Explanation: Government finance ensures welfare, equity, and sustainability.
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