KSEEB Class 10 Economics Important Questions Chapter 4 Public Finance and Budget

Students can download Class 10 Economics Chapter 4 Public Finance and Budget Important Questions, KSEEB SSLC Class 10 Social Science Important Questions and Answers helps you to revise the complete Karnataka State Board Syllabus and score more marks in your examinations.

Karnataka SSLC Class 10 Social Science Economics Important Questions Chapter 4 Public Finance and Budget

Question 1.
What is personal finance?
Answer:
The management of income, expenditure and debt of an individual is called personal finance.

Question 2.
What is public finance?
Answer:
Public finance means the finances of the government. Public finance deals with how a government raises revenues to meet its expenditure and the way in which the government manages its income, expenditure and loans.

Question 3.
Define public finance.
Answer:
According to Dalton, public finance is “concerned with the income and expenditure of public authorities and with the adjustment of one to the other”.

Question 4.
What is fiscal policy?
Answer:
A government, with the intention to achieve economic growth and price stability, announces its policy related to its revenue, expenditure and raising of loans. This policy is called fiscal policy.

KSEEB Class 10 Economics Important Questions Chapter 4 Public Finance and Budget

Question 5.
What are the objectives of fiscal policy?
Answer:
The objectives of fiscal policy are to achieve economic growth, maintain economic (price) stability, and achieve a fair distribution of income.

Question 6.
Explain the importance of public finance.
Answer:
The government usually spends the revenue collected through taxes or the money raised through borrowings for development activities. This increases the growth rate of the economy. Similarly, by spending more during recession, the government tries to regulate the economic activities. Since all these are part of the annual budget prepared by the government, the study of public finance also helps in analysis and evaluation of budgets.

Question 7.
What is a budget?
Answer:
The statement of estimated income and expenditure of a year prepared by the government is called budget.

Question 8.
When does the financial year start and end in India?
Answer:
In India, the financial year starts on April 1st and ends on March 31st of the subsequent year.

Question 9.
What is the purpose of preparing a budget?
Answer:
Through the budget, the government tries to achieve the objectives of growth, stability and redistribution of income.

Question 10.
Who presents the budget of the central government in the Lok Sabha?
Answer:
The Finance Minister presents the budget of the central government in the Lok Sabha.

Question 11.
In which House of the Parliament is the central budget presented?
Answer:
The central budget is presented in the Lok Sabha.

KSEEB Class 10 Economics Important Questions Chapter 4 Public Finance and Budget

Question 12.
When is the central budget normally presented in the Lok Sabha?
Answer:
Normally, the central budget is presented in the Lok Sabha in February or March.

Question 13.
When should the central budget normally be approved by the Parliament?
Answer:
The central budget should normally be approved by the Parliament before March 31st.

Question 14.
Which are the three types of budgets?
Answer:
The three types of budgets are:

  • Surplus budget
  • Deficit budget, and
  • Balanced budget.

Question 15.
What is surplus budget?
Answer:
If the budget shows excess of revenue as compared to expenditure, it is called surplus budget.

Question 16.
What is deficit budget?
Answer:
If the expenditure is more than the revenue, the budget is called a deficit budget.

KSEEB Class 10 Economics Important Questions Chapter 4 Public Finance and Budget

Question 17.
What is a balanced budget?
Answer:
If both income and expenditure are equal, it is called a balanced budget.

Question 18.
Explain the different types of budgets.
Answer:
The three types of budgets are:

  • Surplus budget
  • Deficit budget, and
  • Balanced budget.

If the budget shows excess of revenue as compared to expenditure, it is called surplus budget. If the expenditure is more than the revenue, the budget is called a deficit budget. If both income and expenditure are equal, it is called a balanced budget.

Question 19.
Why do developing countries normally prepare deficit budgets?
Answer:
Developing countries like India normally prepare deficit budgets because they want to spend more to achieve economic progress.

Question 20.
What is public expenditure?
Answer:
The expenditure incurred by public authorities like central, state and local governments to satisfy the collective social wants of the people is known as public expenditure.

Question 21.
Why has public expenditure increased in recent years?
(OR)
Explain the reasons for increase in public expenditure.
Answer:
Public expenditure has increased in recent years for the following reasons:

  • increase in the role and scope of governments
  • to create and maintain conditions conducive to economic development
  • to improve the climate for investment.
  • to provide incentives to save, invest and innovate, and
  • to help in acceleration of economic growth and ensure economic stability.

KSEEB Class 10 Economics Important Questions Chapter 4 Public Finance and Budget

Question 22.
What are the goals of public expenditure?
Answer:
The goals of public expenditure are to:

  • promote faster economic growth
  • promote industry, trade and commerce
  • promote agricultural and rural development
  • promote balanced regional growth
  • build socio-economic overheads, i.e., roadways, railways, dams, etc.
  • promote full employment
  • maximise social welfare.

Question 23.
What is public revenue?
Answer:
Public revenue is the income mobilised by the government for the purpose of financing its activities.

Question 24.
Which are the two sources of public revenue?
Answer:
The two sources of public revenue are revenue receipts and capital receipts.

Question 25.
Distinguish between revenue receipts and capital receipts.
Answer:
All Government receipts which either create liability or reduce assets are treated as capital receipts whereas receipts which neither create liability nor reduce assets of Government are called revenue receipts.

Question 26.
What is meant by revenue receipts?
Answer:
The revenue generated by the government through tax and non-tax sources is called revenue receipts.

Question 27.
Which are the two types of revenue receipts?
Answer:
The two types of revenue receipts are tax revenue and non-tax revenue.

Question 28.
What is a tax?
Answer:
The payment made by the citizens to the government without expecting any benefit in return is called tax.

KSEEB Class 10 Economics Important Questions Chapter 4 Public Finance and Budget

Question 29.
Explain the principle of progressive taxation.
Answer:
The government imposes higher rate of tax on high income group and lower rate of tax on low income group. The poor are exempted from income tax. Similarly, a higher rate of tax is imposed on luxury goods and services used by the rich, and a lower rate of tax on goods and services used by the common people. This principle followed by the governments in the levyjng of taxes is called the principle of progressive taxation.

Question 30.
Which are the two types of taxes imposed by the central government?
(OR)
What types of taxes are imposed by the central government?
Answer:
The central government imposes two types of taxes. They are direct taxes and indirect taxes.

Question 31.
What is a direct tax?
Answer:
When the tax is paid by the individual on whom it is levied, it is called a direct tax. The burden of this tax is not transferable to others.

Question 32.
Name the important direct taxes.
Answer:
The important direct taxes are – personal income tax, corporate tax, stamp duty, etc.

Question 33.
The tax paid by individuals and organisations on their income is called direct tax. Why?
Answer:
The tax paid by individuals and organisations on their income is called direct tax because the tax is paid by the individuals or organisations on which it is imposed. The burden of this tax is not transferable to others.

KSEEB Class 10 Economics Important Questions Chapter 4 Public Finance and Budget

Question 34.
What is an indirect tax?
Answer:
If the burden of a tax imposed by the government is transferable to others, it is called indirect tax. Generally, indirect taxes are imposed on goods and services.

Question 35.
Mention some important indirect taxes.
Answer:
Some important indirect taxes are – central excise duty, goods and services tax (GST), taxes on imports and exports, service tax, etc.

Question 36.
Who bears the burden in the case of indirect taxes?
Answer:
In the case of indirect taxes, the burden of the tax is ultimately borne by the consumer of the good or service.

Question 37.
What is Goods and Services Tax? When did it come into effect?
Answer:
The Goods and Services Tax (GST) is a comprehensive indirect tax on manufacture, sale and consumption of goods and services throughout India. It came into effect from July 1st, 2017.

Question 38.
What are the features of GST?
Answer:
The features of GST are:
Answer:

  • It is an indirect tax on manufacture, sale and consumption of goods and services.
  • It is levied and collected at each stage of sale or purchase of goods and services.
  • It mitigates cascading or double taxation.
  • It helps in creating a common national market.
  • Since the tax is simple, it ensures easier administration and enforcement.
  • There is a reduction in the overall tax burden on consumers.
  • There would be free movement of goods from one state to another.
  • There would be reduction in paperwork to a large extent.
  • There would be higher tax compliance.

Question 39.
What is non-tax revenue?
Answer:
Revenue generated by the government from sources other than taxes is called non-tax revenue.

KSEEB Class 10 Economics Important Questions Chapter 4 Public Finance and Budget

Question 40.
What is non-tax revenue? Which are the non-tax revenue sources of the central government?
(OR)
Explain the main types of non-tax revenue of the central government.
(OR)
Explain the aspects of non-tax revenue of the central government.
Answer:
The revenue that the central government generates from sources other than taxes is called non-tax revenue. The main sources or types of non-tax revenue are:

  • the profit earned by the Reserve Bank of India
  • the profit generated by the Indian railways
  • the revenue generated by the Department of Post and Department of Telecommunications
  • the revenue generated by public sector undertakings
  • the revenue generated by coins and mints
  • various types of fees and penalties, etc.

Question 41.
What are capital receipts?
Answer:
Government receipts which either

  • create liabilities (e.g. borrowing) or
  • reduce assets (e.g. disinvestment) are called capital receipts. Thus when government raises funds either by incurring a liability or by dsposing off its assets, it is called a capital receipt.

Question 42.
Give examples of capital receipts.

  • Two examples of capital receipts which create liability are borrowing and raising of funds.
  • Two examples of capital receipts which reduce assets are disinvestment and recovery of loans.

Question 43.
What is disinvestment?
Answer:
Disinvestment refers to the withdrawal or selling by the government of a part or whole of its shares in public sector undertakings to generate capital revenue.

Question 44.
What is public debt?
Answer:
Public debt refers to the borrowings of the government from internal as well as external sources that constitute the debt owed by the government.

KSEEB Class 10 Economics Important Questions Chapter 4 Public Finance and Budget

Question 45.
Distinguish between internal and external sources of public debt
Answer:
The loan obtained by the government from the citizens of the country, banks, financial institutions, etc., is called internal debt. The loan obtained from foreign governments, foreign financial institutions or international financial institutions is called external or foreign debt.

Question 46.
What is the percet expenditure on interest payments in the 2017-18 budget?
Answer:
The expenditure on interest payments in the 2017-18 budget is 20%.

Question 47.
What is deficit financing?
Answer:
Financing of the budgetary deficit or excess of expenditure over revenue by the government through loans from RBI or printing of new currency is called deficit financing.

Question 48.
What is deficit? Mention the types of deficit
Answer:
An excess of expenditure over income in a given period is called deficit. Deficits are of four types. They are: fiscal deficit, revenue deficit, primary deficit and budget deficit.

Question 49.
What is fiscal deficit?
(OR)
Write the formula for calculation of fiscal deficit
Answer:
Fiscal deficit refers to the deficit due to excess of government expenditure over its revenue receipts and non-debt capital receipts. Fiscal deficit = (Revenue receipts + Non-debt capital receipts) – Total expenditure.

Question 50.
What is revenue deficit?
(OR)
Write the formula for calculation of revenue deficit.
Answer:
The excess of total revenue expenditure of the government over its total revenue receipts is called revenue deficit.
Revenue deficit = Revenue receipts – Revenue expenditure.

KSEEB Class 10 Economics Important Questions Chapter 4 Public Finance and Budget

Question 51.
What is primary deficit?
(OR)
Write the formula for calculation of primary deficit
Answer:
Primary deficit is fiscal deficit of current year minus interest payments on previous borrowings.
Primary deficit = Fiscal deficit – Interest payments.

Question 52.
What is budget deficit?
(OR)
Write the formula for calculation of budget deficit
Answer:
Budget deficit is the overall gap between revenue and expenditure during a given year. Budget deficit = Total revenue – Total expenditure.

Question 53.
What are the effects of deficits?
Answer:
High amount of deficits is not good for the economy as it creates liabilities and uncontrolled deficit also indicates financial indiscipline on the part of the government. It also increases inflation.

KSEEB Class 10 Economics Important Questions Chapter 4 Public Finance and Budget

Question 54.
Name the law enacted to bring about financial discipline. What is its objective?
Answer:
The Fiscal Responsibility and Budget Management Act (FRBMA) has been passed in 2003 to check financial indiscipline on the part of the government. The Act seeks to instill financial discipline, reduce fiscal deficit, improve macro-economic management and the overall management of the public funds by moving towards a balanced budget.

Question 55.
Expand the following abbreviations: VAT, GST, FRBMA.
Answer:
VAT – Value Added Tax, GST – Goods and Services Tax, FRBMA – Fiscal Responsibility and Budget Management Act.

Multiple-choice Questions:

Question 1.
Public finance is concerned with –
(A) income and expenditure of individuals
(B) income and expenditure of government
(C) income, expenditure and debt of individuals
(D) the budget of the central and state governments
Answer:
(B) income and expenditure of government

Question 2.
A government’s policy related to its income, expenditure and debt is called –
(A) monetary policy
(B) budgetary policy
(C) revenue policy
(D) fiscal policy
Answer:
(D) fiscal policy

Question 3.
By increasing the expenditure through a deficit budget the governments try to –
(A) achieve economic development
(B) increase savings
(C) regulate prices
(D) control the money in circulation in the economy
Answer:
(A) achieve economic development

Question 4.
Governments generally impose higher taxes on the rich, moderate taxes on the not-so-rich and exempt the poor from paying taxes. This principle of taxation is called
(A) direct taxation
(B) indirect taxation
(C) progressive taxation
(D) capital taxation
Answer:
(C) progressive taxation

KSEEB Class 10 Economics Important Questions Chapter 4 Public Finance and Budget

Question 5.
Which one of the following is a direct tax?
(A) GST
(B) Central excise duty
(C) Service tax
(D) Income tax
Answer:
(D) Income tax

Question 6.
If in a budget the government’s revenue receipts and non-debt capital receipts are less than the government’s total expenditure, it is called –
(A) fiscal deficit
(B) revenue deficit
(C) primary deficit
(D) budget deficit
Answer:
(A) fiscal deficit

Question 7.
The statement of estimated income and expenditure of the government for a year is called –
(A) public finance
(B) budget
(C) public expenditure
(D) revenue expenditure
Answer:
(B) budget

Question 8.
The major source of revenue for the government is –
(A) interest on loans
(B) fines
(C) profits from government undertakings
(D) taxes
Answer:
(D) taxes

Question 9.
The income mobilised by the government from various sources to finance its activities is –
(A) public finance
(B) non-tax revenue
(C) public revenue
(D) capital receipts
Answer:
(C) public revenue

KSEEB Class 10 Economics Important Questions Chapter 4 Public Finance and Budget

Question 10.
The money paid by the citizens to the government without expecting anything in return is called –
(A) tax
(B) loan
(C) deficit financing
(D) public debt
Answer:
(A) tax

Question 11.
If the burden of tax imposed by the government is transferable to others, it is called –
(A) direct tax
(B) indirect tax
(C) goods and services tax
(D) non-tax revenue
Answer:
(B) indirect tax

Question 12.
Disinvestment is an example for –
(A) revenue receipt
(B) public debt
(C) non-tax revenue
(D) capital receipt
Answer:
(D) capital receipt

Fill in the blanks:

1. The government manages the public finance through fiscal policy.
2. When the government’s revenue is more than its expenditure, it is called budget. surplus
3. The person who presents the central government budget in the Lok Sabha is Finance minister
4. GST came into effect from July 1st, 2017

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