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SSC CGL Preparation – Day 8
Practice Questions: Fiscal Policy
1. What does Fiscal Policy primarily deal with?
A) Money Supply
B) Taxation and Government Spending
C) Interest Rates
D) Inflation Control by RBI
Answer: B
Explanation: Fiscal policy involves government revenue (taxes) and expenditure.
2. Who is responsible for formulating Fiscal Policy in India?
A) Reserve Bank of India
B) SEBI
C) Ministry of Finance
D) Planning Commission
Answer: C
Explanation: The Ministry of Finance is responsible for fiscal matters.
3. The Fiscal Responsibility and Budget Management (FRBM) Act was enacted in which year?
A) 1991
B) 2003
C) 2010
D) 2014
Answer: B
Explanation: The FRBM Act was passed in 2003 to ensure fiscal discipline.
4. Which of the following is NOT a tool of fiscal policy?
A) Government expenditure
B) Subsidies
C) Repo rate
D) Taxation
Answer: C
Explanation: Repo rate is a tool of monetary policy, not fiscal.
5. What is a Fiscal Deficit?
A) Total Expenditure – Total Receipts including borrowings
B) Total Revenue – Total Expenditure
C) Total Expenditure – Total Revenue (excluding borrowings)
D) Revenue Expenditure – Revenue Receipts
Answer: C
Explanation: Fiscal deficit is the gap between total expenditure and revenue excluding borrowings.
6. Revenue Expenditure includes which of the following?
A) Infrastructure spending
B) Loan repayments
C) Salaries and subsidies
D) Capital infusion in PSUs
Answer: C
Explanation: Revenue expenditure includes day-to-day expenses like salaries, subsidies, etc.
7. Which of these is an objective of Fiscal Policy?
A) Price Stability
B) Financial Inclusion
C) Increasing CRR
D) Maintaining Forex Reserves
Answer: A
Explanation: One of the core aims is to maintain price stability (inflation control).
8. Which of the following is NOT a component of Capital Expenditure?
A) Building infrastructure
B) Defense procurement
C) Salary payments
D) Investment in public enterprises
Answer: C
Explanation: Salaries are part of revenue expenditure.
9. A Budget is said to be in deficit when:
A) Revenue = Expenditure
B) Revenue > Expenditure
C) Revenue < Expenditure
D) Revenue + Borrowings = Expenditure
Answer: C
Explanation: When the government’s revenue is less than its expenditure, it’s a deficit.
10. A surplus budget implies:
A) Balanced Expenditure
B) Government spending more than income
C) Government earning more than spending
D) Fiscal Deficit
Answer: C
Explanation: Surplus budget indicates excess revenue over spending.
