Government Budget and the Economy

17 solved questions from Class 12 Economics, each with the full working. Tap any question to see the step-by-step solution.

• 1 What is the primary topic or theoretical principle explored in 'Government Budget and the Economy' (Class 12 ECONOMICS)? medium MCQ Chapter Core Principle
• 2 Which key mechanism or analytical rule is highlighted in 'Government Budget and the Economy'? medium MCQ Key Analytical Mechanism
• 3 What is the primary topic or principle explained in 'Government Budget and the Economy' (Class 12 Economics)? medium MCQ Chapter Core Concept
• 4 Which key observation or fact is central to understanding 'Government Budget and the Economy'? medium MCQ Key Fact & Mechanism
• 5 Why is the study of 'Government Budget and the Economy' important for students of Class 12? medium MCQ Learning Significance
• 6 What is a common application or real-world example related to 'Government Budget and the Economy'? medium MCQ Real World Application
• 7 What key takeaway should students retain after completing 'Government Budget and the Economy'? medium MCQ Chapter Summary & Takeaway
• 8 Assume the marginal propensity to consume (MPC) is 0.75. The government decides to increase its expenditure by Rs. 1000 crore while keeping taxes unchanged. What will be the expected increase in aggregate demand using the fiscal multiplier? medium 3 marks Fiscal multiplier effect
• 9 Explain how an expansionary government budget (higher expenditure and lower taxes) can affect aggregate demand and price level in the short run. Discuss any two possible side‑effects. hard 5 marks Impact of expansionary fiscal policy
• 10 Revenue receipts of the government for a fiscal year are Rs. 12 lakh crore and revenue expenditure is Rs. 14 lakh crore. What is the revenue deficit for that year? easy MCQ 1 mark Revenue deficit calculation
• 11 The fiscal deficit of India in FY 2022‑23 is Rs. 6.5 lakh crore. Interest payments on previous borrowings amount to Rs. 2.2 lakh crore. Calculate the primary deficit for the same year. medium 2 marks Primary deficit determination
• 12 Revenue receipts of the government for a fiscal year are Rs. 10 lakh crore and revenue expenditure is Rs. 12 lakh crore. What is the revenue deficit for that year? easy 1 mark Revenue deficit calculation
• 13 A government plans to borrow Rs. 10 lakh crore to fund infrastructure projects. If the fiscal deficit for the year is Rs. 12 lakh crore and interest payments on past debt are Rs. 2 lakh crore, calculate the primary deficit. Further, explain how this borrowing could affect the domestic interest rate and the rupee exchange rate in the short run. hard 4 marks Impact of borrowing on interest rates and exchange rate
• 14 A government plans to borrow Rs. 20 lakh crore for a large infrastructure project. Discuss how this borrowing might affect the short‑term domestic interest rates and the rupee exchange rate, citing concepts such as crowding‑out and capital outflows. hard 5 marks Effect of borrowing on interest rates and exchange rates
• 15 The government borrows Rs. 5 lakh crore to fund a new program. If the fiscal deficit for the year is Rs. 8 lakh crore and interest payments on previous borrowings amount to Rs. 1.5 lakh crore, calculate the primary deficit for that year. medium 3 marks Primary deficit definition
• 16 Assuming the marginal propensity to consume (MPC) is 0.6, the government decides to increase its expenditure by Rs. 1500 crore while keeping taxes unchanged. What will be the expected increase in aggregate demand using the fiscal multiplier? medium MCQ 4 marks Fiscal multiplier effect
• 17 Revenue receipts of the government for FY 2025‑26 are Rs. 8 lakh crore and revenue expenditure is Rs. 9 lakh crore. What is the revenue deficit for that year? easy 1 mark Revenue deficit calculation