Government Budget and the Economy — Class 12 Economics PYQs

Read the following statements : Assertion (A) and Reason (R). Choose the correct option from those given below :
Assertion (A): Public goods are those goods that are collectively consumed by the public.
Reason (R) : Public goods are excludable and rivalrous in nature.
Options :
(A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false.
(D) Assertion (A) is false, but Reason (R) is true.

From the set of terms given in Column-I and Column-II, choose the correct pair :

Column I	Column II
(a) Non-tax Revenue	(i) Goods and Services Tax
(b) Indirect Tax	(ii) Free-rider
(c) Capital expenditure	(iii) Borrowings
(d) Private goods	(iv) Rivalrous in nature

"Under the Ayushmaan Bharat Scheme, the government provides free medical treatment to the poorer section of the society."
Identify and explain the nature of budget expenditure and its objective, indicated in the given statement.

Identify, which of the following is not to be considered while estimating Revenue Deficit of a country. (Choose the correct option)
(A) Wages and salaries paid by the government
(B) Interest payments made by the Central Government
(C) Direct Tax Collection
(D) Expenditure incurred on construction of flyover

Read the following statements : Assertion (A) and Reason (R). Choose one of the correct options given below :
Assertion (A) : In case of public goods no one can be excluded from enjoying the benefits.
Reason (R) : Public goods are non-rivalrous and non-excludable in nature.
Options :
(A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false.
(D) Assertion (A) is false, but Reason (R) is true.

The budget under, which the government may spend an amount equal to the revenue it collects is referred as ______ Budget.
(Choose the correct option to fill up the blank)
(A) Surplus
(B) Deficit
(C) Balanced
(D) Deflationary

(a) "The government generally levies higher Goods and Services Tax (GST) on socially undesirable products like cigarettes, tobacco, liquor etc."
Identify and explain the indicated government budget objective in the above statement.
OR
(b) Two friends Ramesh (a software engineer) and Pihu (a bakery owner) are discussing their contribution to the nation's economy through tax payments. Ramesh earns ₹ 8,00,000 per year, which makes him liable to pay income tax. Pihu pays Goods and Services Tax (GST) on the sale of cakes and pastries.
On the basis of the given text, identify whether Ramesh is paying a direct tax or an indirect tax. Explain valid differences between two types of taxes.

"A significant proportion of subsidies on fertilizer was a key component of the fiscal statement of the Central Government for year 2023-24."
Identify the nature of government expenditure and its objective.

"In the recent Budget the Government allocated funds for construction of new metro lines in smart cities to improve public transportation and reduce pollution."
Identify the nature of government expenditure & its objective.

Classify the following as Revenue receipts or Capital receipts. Give valid arguments in support of your answer :
(i) Interest received on loan.
(ii) Disinvestment receipts from the sale of a government company.
(iii) Financial assistance by the Government of USA for promoting girl education in India.