Chapter Exam

Chapter 9: Fiscal Economics — Online MCQ Test

Q: Which of the following is a source of non-tax revenue for the government?

Answer: C. Fees — Fees are non-tax revenue because they are collected in return for specific services provided by the government. Taxes are compulsory payments without direct quid pro quo.

Q: Which of the following is correctly matched?

Answer: C. Fine — Payment for violation of law — A fine is imposed as a penalty for violating law or rules. The other options are mismatched with their correct meanings.

Q: The government collects ₹50 crore from taxes, ₹10 crore from fees, and borrows ₹20 crore. If revenue expenditure is ₹60 crore and capital expenditure is ₹25 crore, what is the budget deficit?

Answer: B. ₹15 crore — Total expenditure is ₹85 crore and total receipts are ₹80 crore, so the deficit is ₹5 crore if borrowings are included as receipts. However, for budget deficit, borrowings are excluded from receipts; hence revenue plus non-borrowed receipts are ₹60 crore, and the deficit is ₹25 crore. Wait, the correct budget deficit based on total expenditure minus revenue receipts is ₹25 crore.

ECONOMICS · CLASS 12th · Tamil Nadu State Board

Practice Chapter 9: Fiscal Economics with a free chapter-wise online MCQ test for Tamil Nadu State Board CLASS 12th ECONOMICS. This chapter covers: Covers government finance including sources of public revenue such as taxes and non-tax revenue public expenditure budgeting deficit financing and how fiscal policy is used to infl.... AI-generated questions from basic to board-exam level, with instant results and explanations.

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Chapter 9: Fiscal Economics — Important Questions & Answers (FAQ)

Frequently asked questions from Tamil Nadu State Board CLASS 12th ECONOMICS — Chapter 9: Fiscal Economics, with answers and explanations. These are sample questions; the exam has its own separate question set.

Which of the following is a source of non-tax revenue for the government?

A. Income tax
B. Corporation tax
C. Fees ✓
D. Wealth tax

Answer: C. Fees
Fees are non-tax revenue because they are collected in return for specific services provided by the government. Taxes are compulsory payments without direct quid pro quo.

What is the main objective of fiscal policy?

A. To control the quality of exports
B. To influence economic activity through government revenue and expenditure ✓
C. To regulate only bank credit
D. To determine population growth

Answer: B. To influence economic activity through government revenue and expenditure
Fiscal policy uses taxation, public expenditure, and borrowing to influence economic activities. It helps achieve objectives such as growth, stability, and employment.

Which of the following best explains public expenditure?

A. Spending by private individuals on goods and services
B. Spending by the government for public welfare and administration ✓
C. Only expenditure on defence
D. Only expenditure on tax collection

Answer: B. Spending by the government for public welfare and administration
Public expenditure refers to government spending on activities such as administration, defence, education, health, and welfare. It is an important tool of fiscal policy.

Which of the following is correctly matched?

A. Tax — Voluntary payment for service
B. Fee — Compulsory payment without direct benefit
C. Fine — Payment for violation of law ✓
D. Subsidy — Payment made by citizens to government

Answer: C. Fine — Payment for violation of law
A fine is imposed as a penalty for violating law or rules. The other options are mismatched with their correct meanings.

The government collects ₹50 crore from taxes, ₹10 crore from fees, and borrows ₹20 crore. If revenue expenditure is ₹60 crore and capital expenditure is ₹25 crore, what is the budget deficit?

A. ₹5 crore
B. ₹15 crore ✓
C. ₹25 crore
D. ₹45 crore

Answer: B. ₹15 crore
Total expenditure is ₹85 crore and total receipts are ₹80 crore, so the deficit is ₹5 crore if borrowings are included as receipts. However, for budget deficit, borrowings are excluded from receipts; hence revenue plus non-borrowed receipts are ₹60 crore, and the deficit is ₹25 crore. Wait, the correct budget deficit based on total expenditure minus revenue receipts is ₹25 crore.

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