Q.1 Which of the following is a primary objective of the Government of India's fiscal policy?
Regulating foreign exchange rates
Controlling money supply
Ensuring economic growth and stability
Setting interest rates
Explanation - Fiscal policy involves government spending and taxation decisions aimed at promoting economic growth, stabilizing prices, and reducing unemployment.
Correct answer is: Ensuring economic growth and stability
Q.2 What is the main instrument of the Government of India to finance its deficit spending?
Public Provident Fund
Treasury Bills and Government Bonds
Corporate Bonds
Mutual Funds
Explanation - The government raises funds to meet fiscal deficits primarily through issuing Treasury Bills and Government Bonds in the market.
Correct answer is: Treasury Bills and Government Bonds
Q.3 Which policy focuses on influencing the overall level of demand in the economy?
Monetary Policy
Fiscal Policy
Industrial Policy
Labour Policy
Explanation - Fiscal policy uses government spending and taxation to influence aggregate demand, economic growth, and employment.
Correct answer is: Fiscal Policy
Q.4 Which government authority is responsible for formulating fiscal policy in India?
Reserve Bank of India
Ministry of Finance
Securities and Exchange Board of India
Finance Commission
Explanation - The Ministry of Finance formulates and implements fiscal policy, including taxation and government expenditure.
Correct answer is: Ministry of Finance
Q.5 What is a primary aim of the 'Disinvestment Policy' of the Indian government?
Increasing government ownership in PSUs
Reducing fiscal burden and raising funds
Controlling inflation
Regulating the banking sector
Explanation - Disinvestment involves selling government stakes in public sector units (PSUs) to reduce fiscal burden and mobilize resources for development.
Correct answer is: Reducing fiscal burden and raising funds
Q.6 Which of the following is an example of indirect taxation used in fiscal policy?
Income Tax
Corporate Tax
Goods and Services Tax (GST)
Wealth Tax
Explanation - GST is an indirect tax levied on goods and services, which forms a key part of India's taxation structure.
Correct answer is: Goods and Services Tax (GST)
Q.7 What does the term 'fiscal deficit' signify?
Total government expenditure
Total revenue minus total expenditure
Excess of government expenditure over revenue
Excess of revenue over expenditure
Explanation - Fiscal deficit occurs when the government's total expenditure exceeds its total revenue, excluding borrowings.
Correct answer is: Excess of government expenditure over revenue
Q.8 Which of the following is NOT a component of government expenditure?
Revenue Expenditure
Capital Expenditure
Public Debt Repayment
Corporate Investment
Explanation - Government expenditure includes revenue and capital spending, and debt repayment. Corporate investment is not part of government expenditure.
Correct answer is: Corporate Investment
Q.9 Which policy is primarily aimed at controlling inflation and stabilizing currency?
Monetary Policy
Fiscal Policy
Trade Policy
Labour Policy
Explanation - Monetary policy, managed by the RBI, regulates money supply and interest rates to control inflation and ensure currency stability.
Correct answer is: Monetary Policy
Q.10 What is the main goal of the 'Make in India' initiative in terms of government financial policies?
Promote foreign investment and industrial growth
Increase imports to boost trade
Reduce government spending
Strengthen monetary policy
Explanation - The 'Make in India' initiative aims to boost manufacturing, attract foreign investment, and generate employment.
Correct answer is: Promote foreign investment and industrial growth
Q.11 Which of the following is a key objective of the Pradhan Mantri Jan Dhan Yojana?
Promoting financial inclusion
Reducing corporate taxes
Controlling fiscal deficit
Managing inflation
Explanation - PMJDY aims to provide banking facilities to all households, especially the unbanked population, thereby promoting financial inclusion.
Correct answer is: Promoting financial inclusion
Q.12 The term 'revenue deficit' in government finances refers to:
Total revenue minus capital expenditure
Revenue expenditure exceeding revenue receipts
Excess of capital receipts over revenue expenditure
Total expenditure exceeding borrowing
Explanation - Revenue deficit occurs when revenue expenditure is higher than revenue receipts, indicating insufficient revenue to meet recurring expenditures.
Correct answer is: Revenue expenditure exceeding revenue receipts
Q.13 Which of the following is an example of a government scheme that provides direct benefit transfer?
Mahatma Gandhi National Rural Employment Guarantee Scheme
Pradhan Mantri Kisan Samman Nidhi
National Pension Scheme
Atal Pension Yojana
Explanation - PM-KISAN provides direct income support to farmers through electronic transfers to their bank accounts.
Correct answer is: Pradhan Mantri Kisan Samman Nidhi
Q.14 Which of the following instruments is used by the government to borrow from the public?
Treasury Bills
Cash Reserve Ratio
Repo Rate
Fiscal Stimulus
Explanation - Treasury Bills are short-term debt instruments issued by the government to borrow money from the public.
Correct answer is: Treasury Bills
Q.15 What does the term 'monetisation of deficit' mean?
Printing currency to finance fiscal deficit
Reducing government expenditure
Increasing tax rates
Borrowing from international agencies
Explanation - Monetisation of deficit involves the RBI financing government deficit by creating money, which can lead to inflation if excessive.
Correct answer is: Printing currency to finance fiscal deficit
Q.16 Which government initiative aims at reducing dependence on cash and promoting digital transactions?
Digital India
Make in India
Skill India
Start-up India
Explanation - Digital India promotes e-governance, digital payments, and online services to reduce cash dependency and increase transparency.
Correct answer is: Digital India
Q.17 Which of the following is a direct tax levied by the Government of India?
Excise Duty
Custom Duty
Income Tax
Service Tax
Explanation - Income tax is a direct tax on individuals and corporate entities, forming a major part of government revenue.
Correct answer is: Income Tax
Q.18 What is the role of Finance Commission in India?
Formulating monetary policy
Allocating resources between the Centre and States
Managing government banks
Implementing Direct Benefit Transfers
Explanation - The Finance Commission recommends distribution of tax revenues between the central and state governments to maintain fiscal federalism.
Correct answer is: Allocating resources between the Centre and States
Q.19 Which of the following is NOT an objective of the government’s subsidy policy?
Providing affordable goods/services
Promoting social welfare
Encouraging overconsumption
Supporting underprivileged sections
Explanation - Subsidies aim to make essential goods affordable and promote welfare, not encourage overconsumption.
Correct answer is: Encouraging overconsumption
Q.20 Which of the following best describes the 'Public Debt' of the government?
Money borrowed by citizens from banks
Total liabilities of the government due to borrowings
Expenditure on public welfare
Revenue earned from taxes
Explanation - Public debt is the total amount the government owes due to borrowing from domestic and international sources.
Correct answer is: Total liabilities of the government due to borrowings
Q.21 The term 'budgetary deficit' is used to indicate:
Excess of revenue receipts over expenditure
Excess of total expenditure over revenue and capital receipts
Revenue expenditure only
Capital expenditure only
Explanation - Budgetary deficit occurs when total government expenditure exceeds the sum of revenue and capital receipts in a financial year.
Correct answer is: Excess of total expenditure over revenue and capital receipts
Q.22 Which policy tool is used to regulate the liquidity in the economy?
Monetary Policy
Fiscal Policy
Industrial Policy
Labour Policy
Explanation - Monetary policy regulates liquidity, credit flow, and interest rates in the economy to ensure financial stability.
Correct answer is: Monetary Policy
Q.23 Which government scheme focuses on providing financial support for healthcare expenses?
Ayushman Bharat
PM-KISAN
Digital India
Make in India
Explanation - Ayushman Bharat provides health insurance coverage to economically weaker sections to reduce out-of-pocket expenses.
Correct answer is: Ayushman Bharat
Q.24 Which of the following is a short-term instrument of government borrowing?
Treasury Bills
Government Bonds
Public Provident Fund
National Pension Scheme
Explanation - Treasury bills are short-term debt instruments (usually 91, 182, or 364 days) issued by the government to meet temporary funding needs.
Correct answer is: Treasury Bills