NCERT Solutions for Class 12 Macro Economics Government Budget and the Economy

NCERT Solutions for Class 12 Macro Economics Government Budget and the Economy

NCERT Solutions for Class 12 Macro Economics Government Budget and the Economy is designed and prepared by the best teachers across India. All the important topics are covered in the exercises and each answer comes with a detailed explanation to help students understand concepts better. These NCERT solutions play a crucial role in your preparation for all exams conducted by the CBSE, including the JEE.

NCERT TEXTBOOK QUESTIONS SOLVED

1. Define government budget.

Ans. A government budget is an annual financial statement showing itemwise estimates of expected revenue and anticipated expenditure during a fiscal year.

2. State any one obj ective of a government budget.

Ans. Activities to secure a reallocation of resources

3. Define a tax.

Ans. A tax is a legally compulsory payment imposed by the government on income and profit of persons and companies without reference to any benefit. Tax is of two types: Direct tax and Indirect tax.

4. Why is service tax an indirect tax?

Ans. Its impact and incidence lie on different persons.

5. State any two sources of non-tax revenue receipts.

Ans. Commercial revenue (profit and interest)
Administrative revenueffees, fines and penalties, escheats etc)

6. Is borrowing by the government a revenue receipt?

Ans. No, it is not so because it creates a liability (for the government) of repayment.

7. Why is tax not a capital receipt?

Ans. Tax is not a capital receipt because it leads neither to creation of liability nor to reduction in assets.

8. Why is interest termed as a revenue receipt?

Ans. Interest is a revenue receipt because it creates neither any liability nor causes a reduction in the assets of the government.

9. Why are borrowings a capital receipt?

Ans. They create a liability (in terms of repayment).

10. Why are subsidies treated as revenue expenditure?

Ans. Subsidies are treated as revenue expenditure because they create neither any asset nor cause a reduction in any liability of the government.

11. Why is repayment of loan a capital expenditure?

Ans. It reduces the liabilities of the government.

12. Why is recovery of loans treated as a capital receipt?[CBSE All India 2005]

Ans. Recovery of loans is treated as a capital receipt because it reduces assets of the government.

13. Why are receipts from taxes categorised as revenue receipts?

Ans. Receipts from taxes are categorised as revenue receipts because they create neither any liability nor cause a reduction in the assets of the government.

14. What is meant by revenue deficit?

Ans. Revenue deficit refers to the excess of revenue expenditure of the government over its revenue receipts. Revenue Deficit = Revenue Expenditure- Revenue Receipts

15. If the revenue receipts are Rs. 1,000 crore and revenue expenditure is Rs. 1,200 crore, how much will be the revenue deficit?

Ans. Revenue Deficit = Revenue Expenditure – Revenue Receipts = 1,200 – 1,000 = Rs. 200 crore.

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