Introductory Macroeconomics

Which of the following is/are included in the capital budget of the Government of India?

1. 1.Expenditure on acquisition of assets like roads, buildings, machinery, etc.
2. 2.Loans received from foreign governments
3. 3.Loans and advances granted to the States and Union Territories

Select the correct answer using the code given below.

1. (a)1 only
2. (b)2 and 3 only
3. (c)1 and 3 only
4. (d)1, 2 and 3

What is/are the most likely advantages of implementing 'Goods and Services Tax (GST)'?

1. 1.It will replace multiple taxes collected by multiple authorities and will thus create a single market in India.
2. 2.It will drastically reduce the 'Current Account Deficit' of India and will enable it to increase its foreign exchange reserves.
3. 3.It will enormously increase the growth and size of economy of India and will enable it to overtake China in the near future.

Select the correct answer using the code given below:

1. (a)1 only
2. (b)2 and 3 only
3. (c)1 and 3 only
4. (d)1, 2 and 3

Along with the Budget, the Finance Minister also places other documents before the Parliament which include 'The Macro Economic Framework Statement'. The aforesaid document is presented because this is mandated by

1. (a)Long standing parliamentary convention
2. (b)Article 112 and Article 110(1) of the Constitution of India
3. (c)Article 113 of the Constitution of India
4. (d)Provisions of the Fiscal Responsibility and Budget Management Act, 2003

Which one of the following is likely to be the most inflationary in its effects?

1. (a)Repayment of public debt
2. (b)Borrowing from the public to finance a budget deficit
3. (c)Borrowing from the banks to finance a budget deficit
4. (d)Creation of new money to finance a budget deficit

With reference to Indian economy, demand-pull inflation can be caused/increased by which of the following?

1. 1.Expansionary policies
2. 2.Fiscal stimulus
3. 3.Inflation-indexing wages
4. 4.Higher purchasing power
5. 5.Rising interest rates

Select the correct answer using the code given below.

1. (a)1, 2 and 4 only
2. (b)3, 4 and 5 only
3. (c)1, 2, 3 and 5 only
4. (d)1, 2, 3, 4 and 5

With reference to the expenditure made by an organisation or a company, which of the following statements is/are correct?

1. 1.Acquiring new technology is capital expenditure.
2. 2.Debt financing is considered capital expenditure, while equity financing is considered revenue expenditure.

Select the correct answer using the code given below:

1. (a)1 only
2. (b)2 only
3. (c)Both 1 and 2
4. (d)Neither 1 nor 2

With reference to the Indian economy, consider the following statements:

1. 1.A share of the household financial savings goes towards government borrowings.
2. 2.Dated securities issued at market-related rates in auctions form a large component of internal debt.

Which of the above statements is/are correct?

1. (a)1 only
2. (b)2 only
3. (c)Both 1 and 2
4. (d)Neither 1 nor 2

Consider the following statements:

1. I.Capital receipts create a liability or cause a reduction in the assets of the Government.
2. II.Borrowings and disinvestment are capital receipts.
3. III.Interest received on loans creates a liability of the Government.

Which of the statements given above are correct?

1. (a)I and II only
2. (b)II and III only
3. (c)I and III only
4. (d)I, II and III

Suppose the revenue expenditure is ₹ 80,000 crores and the revenue receipts of the Government are ₹ 60,000 crores. The Government budget also shows borrowings of ₹ 10,000 crores and interest payments of ₹ 6,000 crores. Which of the following statements are correct?

1. I.Revenue deficit is ₹ 20,000 crores.
2. II.Fiscal deficit is ₹ 10,000 crores.
3. III.Primary deficit is ₹ 4,000 crores.

Select the correct answer using the code given below.

1. (a)I and II only
2. (b)II and III only
3. (c)I and III only
4. (d)I, II and III

A country's fiscal deficit stands at ₹ 50,000 crores. It is receiving ₹ 10,000 crores through non-debt creating capital receipts. The country's interest liabilities are ₹ 1,500 crores. What is the gross primary deficit?

1. (a)₹ 48,500 crores
2. (b)₹ 51,500 crores
3. (c)₹ 58,500 crores
4. (d)None of the above