CUET UG Categorised PYQ Economics Unit 10

(Detailed) → The government uses its budget to allocate funds to different sectors and schemes. → When ₹48,000 crore is allotted to PM Awas Yojana, the government is directing resources toward housing facilities. → This represents allocation or reallocation of public resources for social and economic welfare. → Therefore, the objective fulfilled here is reallocation of resources. → Hence, Option C is the correct answer.

(Detailed) → Revenue deficit means the excess of revenue expenditure over revenue receipts. → Formula: Revenue Deficit = Revenue Expenditure − Revenue Receipts. → To reduce revenue deficit, the government can either increase revenue receipts or reduce revenue expenditure. → Taxation is an important source of revenue receipt for the government. → Therefore, increasing taxation can help reduce the rising revenue deficit. → Hence, Option C is the correct answer.

(Detailed) → The passage clearly states that Budget 2022 has been recognized by the business community as a growth and infrastructure-focused budget. → It also mentions future income and employment-generating capital expenditure as key areas of attention. → Therefore, for the business community, Budget 2022 relates to growth and infrastructure focus. → Hence, Option B is the correct answer.

(Detailed) → Formula: Fiscal Deficit = Total Expenditure − Receipts excluding borrowings. → Given: Total Expenditure = ₹39,44,909 crore. → Receipts excluding borrowings = ₹22,83,713 crore. → Fiscal Deficit = ₹39,44,909 crore − ₹22,83,713 crore. → Fiscal Deficit = ₹16,61,196 crore. → Therefore, the fiscal deficit is ₹16,61,196 crore. → Hence, Option D is the correct answer.

(Detailed) → Interest payments do not create assets; therefore, they are revenue expenditure. So, (A) matches with (III). → Grants-in-aid received are revenue receipts because they do not create liability or reduce assets. So, (B) matches with (I). → Borrowings create liability for the government, so they are capital receipts. So, (C) matches with (IV). → Construction of a flyover creates an asset, so it is capital expenditure. So, (D) matches with (II). → Hence, Option A is the correct answer.

(Detailed) → The passage directly states that the highest percentage-wise increase is seen for the Ministry of Communications, Ministry of Road Transport and Highways, and Ministry of Jal Shakti. → Among the given options, Option B correctly matches this statement. → Therefore, the true statement is that the highest percentage-wise increase in allocation is seen for the Ministry of Communications. → Hence, Option B is the correct answer.

(Detailed) → Revenue deficit means the government's revenue expenditure is more than its revenue receipts. → Such a deficit can be financed through borrowings from the public or the central bank. → It can also be financed through disinvestment, which provides capital receipts. → Therefore, A and C are correct ways to finance the deficit. → Hence, Option C is the correct answer.

(Detailed) → Revenue Receipt neither creates liability nor reduces assets, so it matches with "Do not increase Liability." Therefore, (A) matches with (IV). → Capital Receipt may create liability, such as borrowing, so it matches with "Increase in Liability." Therefore, (B) matches with (I). → Revenue Expenditure does not create assets, so it matches with "Do not increase Asset." Therefore, (C) matches with (II). → Capital Expenditure creates assets, so it matches with "Increase in Asset." Therefore, (D) matches with (III). → Therefore, A-IV, B-I, C-II, D-III is correct. → Hence, Option B is the correct answer.

(Detailed) → Revenue expenditure refers to government expenditure that neither creates assets nor reduces liabilities. → Payment of salary to staff of a government hospital is a regular administrative expenditure. → It does not create a capital asset or decrease any liability. → Hence, it is revenue expenditure. → Hence, Option C is the correct answer.

(Detailed) → Fiscal Deficit = Total Expenditure − Total Receipts excluding borrowings. → Total expenditure includes revenue expenditure and capital expenditure. → Therefore, Statements (A) and (D) are considered. → Revenue receipts are included in total receipts excluding borrowings. Therefore, Statement (B) is considered. → Debt-creating receipts such as borrowings are excluded because fiscal deficit itself shows the borrowing requirement. → Deficit on current account is a Balance of Payments concept. → Therefore, A, B and D are considered. → Hence, Option B is the correct answer.

(Detailed) → Public goods are goods whose benefits are available to everyone. → No individual can be easily excluded from enjoying their benefits. → Because of the free-rider problem, pure public goods are usually provided by the government, not the private market. → Therefore, "May be produced by private sector" is not true in the standard NCERT sense. → Hence, Option B is the correct answer.

(Detailed) → A destination-based tax is levied at the place where goods or services are finally consumed. → GST follows this principle because the tax revenue goes to the state where the final consumption takes place. → It is not based mainly on the place where the goods are manufactured. → Therefore, GST is destination-based because tax is calculated at final consumption. → Hence, Option A is the correct answer.

(Detailed) → The passage states that GST was implemented through the 101st Constitutional Amendment Act. → This amendment enabled the introduction of GST as a single comprehensive indirect tax. → Therefore, GST was introduced by the 101st Constitutional Amendment. → Hence, Option B is the correct answer.

(Detailed) → The passage states that by implementing GST, it is expected that GDP will rise by about 2%. → This is because GST reduces the cascading effect of taxes and makes business operations more efficient. → Therefore, the expected impact on GDP was a rise of about 2%. → Hence, Option D is the correct answer.

(Detailed) → The passage clearly says that compliance has become easier because all tax payment-related services are available online through a common portal. → This reduces paperwork and simplifies tax filing and payment. → Therefore, GST made compliance easier through online tax payment-related services. → Hence, Option C is the correct answer.

(Detailed) → GST replaced and subsumed several indirect taxes that existed earlier. → Sales tax was one such indirect tax on the sale of goods. → Since GST is a comprehensive indirect tax, sales tax was subsumed under GST. → Hence, Option B is the correct answer.

(Detailed) → The Fiscal Responsibility and Budget Management Act was enacted in India in 2003. → Its purpose was to bring fiscal discipline and reduce fiscal deficit. → It also aimed at improving transparency in government budget management. → Hence, Option B is the correct answer.

(Detailed) → The stabilisation function of government aims to reduce fluctuations in the economy. → During recession, the government may increase expenditure or reduce taxes to expand demand. → During inflation, it may reduce expenditure or increase taxes to reduce demand. → Therefore, intervention to expand or reduce demand is the stabilisation function. → Hence, Option C is the correct answer.

(Detailed) → Revenue expenditure = ₹25,000 crores. → Capital expenditure = ₹35,000 crores. → Total expenditure = 25,000 + 35,000 = ₹60,000 crores. → Revenue receipt = ₹20,000 crores. → Capital receipt = ₹30,000 crores. → Total receipts = 20,000 + 30,000 = ₹50,000 crores. → Budget Deficit = Total expenditure − Total receipts. → Budget Deficit = 60,000 − 50,000 = ₹10,000 crores. → Hence, Option B is the correct answer.

(Detailed) → Capital receipts are receipts that either create liability for the government or reduce government assets. → Examples include borrowings, recovery of loans and disinvestment. → They are generally non-recurring in nature. → Therefore, the statement "They are regular and recurring in nature" describes revenue receipts, not capital receipts. → Hence, Option A is the correct answer.

(Detailed) → Direct taxes are imposed directly on individuals or organisations. → The person who earns income pays the tax directly to the government. → Income tax and corporate tax are common examples. → Therefore, direct tax is called direct because it is collected directly from income earners. → Hence, Option D is the correct answer.

(Detailed) → Fiscal deficit shows the total borrowing requirement of the government. → When government expenditure exceeds receipts excluding borrowings, the gap is financed through borrowings. → Therefore, borrowings in the government budget indicate fiscal deficit. → Hence, Option C is the correct answer.

(Detailed) → Fiscal policy refers to government policy regarding taxation, public expenditure and borrowing or deficit financing. → Government expenditure, taxation and deficit financing are tools of fiscal policy. → Open market operations are conducted by the central bank. → Therefore, open market operations are part of monetary policy, not fiscal policy. → Hence, A, B and C are correct. → Hence, Option C is the correct answer.

(Detailed) → Revenue Tax Receipts include taxes received by the government, such as income tax. So, (A) matches with (II). → Revenue Non-Tax Receipts include fees, fines, interest and license fees. So, (B) matches with (III). → Revenue Plan Expenditure includes expenditure on planned welfare schemes such as mid-day meal. So, (C) matches with (IV). → Non-Plan Revenue Expenditure includes regular administrative expenses such as salary of government employees. So, (D) matches with (I). → Hence the correct matching is A - II, B - III, C - IV, D - I. → Hence, Option C is the correct answer.

(Detailed) → Gross Fiscal Deficit shows the excess of total expenditure over the sum of revenue receipts and non-debt creating capital receipts. → Formula: Gross Fiscal Deficit = Total Expenditure − Revenue Receipts − Non-debt Creating Capital Receipts. → Therefore, the blank is Non-debt creating capital receipts. → Hence, Option C is the correct answer.

(Detailed) → Government can use taxation to influence allocation of resources in the economy. → Heavy taxes on harmful goods like liquor and cigarettes increase their cost. → This discourages production and consumption of such goods. → As a result, resources can be redirected toward socially useful goods. → Therefore, the objective is reallocation of resources. → Hence, Option C is the correct answer.

(Detailed) → Fiscal policy deals with government expenditure, taxation and borrowing. → The passage mentions a Rs. 20 lakh crore stimulus package and its effect on fiscal deficit. → Since it is a government measure to support demand and the economy, it is part of fiscal policy. → Hence, Option A is the correct answer.

(Detailed) → Article 112 of the Constitution of India provides for the Annual Financial Statement. → This statement presents the estimated receipts and expenditure of the Government of India for a financial year. → The Annual Financial Statement is popularly known as the Union Budget. → Therefore, Article 112 deals with the Union Budget. → Hence, Option C is the correct answer.

(Detailed) → Capital receipts are those receipts of the government that either create liabilities or reduce financial assets. → For example, borrowings create liability because the government has to repay them. → Recovery of loans reduces government assets because loans earlier given by the government are recovered. → Therefore, elements that create liability and decrease assets of government are known as capital receipts. → Hence, Option A is the correct answer.

(Detailed) → The Annual Financial Statement is the constitutional name for the Union Budget and is the main budget document. Therefore, (A) matches with (III). → Capital receipts either create liabilities or reduce assets. Therefore, (B) matches with (I). → Capital payments or capital expenditure create assets or reduce liabilities. Therefore, (C) matches with (IV). → When exports are greater than imports, the country has a trade surplus. Therefore, (D) matches with (II). → Hence, Option B is the correct answer.