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Fiscal Policy & Budget

45 questions in Indian Economy.

Asked in 2026, 2025, 2023, 2022, 2021, 2020, 2018, 2017, 2016, 2015, 2014, 2013, 2012, 2011

2026 · Q59Indian EconomyFiscal Policy & Budgetmoderate

Which one of the following best describes the ‘Crowding Out Effect’ in the context of fiscal policy ?

  1. (a)A situation where private investment increases due to increased Government spending
  2. (b)A situation where Government borrowing leads to higher interest rates, which reduces private investment
  3. (c)A situation where an increase in taxes leads to increased private sector investment
  4. (d)A situation where Government spending has no impact on aggregate demand
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Official answer(b) A situation where Government borrowing leads to higher interest rates, which reduces private investment

2025 · Q66Indian EconomyFiscal Policy & Budgetmoderate

Which of the following statements with regard to recommendations of the 15th Finance Commission of India are correct? I. It has recommended grants of ₹ 4,800 crores from the year 2022–23 to the year 2025–26 for incentivizing States to enhance educational outcomes. II. 45% of the net proceeds of Union taxes are to be shared with States. III. ₹ 45,000 crores are to be kept as performance-based incentive for all States for carrying out agricultural reforms. IV. It reintroduced tax effort criteria to reward fiscal performance. Select the correct answer using the code given below.

  1. (a)I, II and III
  2. (b)I, II and IV
  3. (c)I, III and IV
  4. (d)II, III and IV
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Official answer(c) I, III and IV

2023 · Q89Indian EconomyFiscal Policy & Budgetmoderate

Consider the following statements : The 'Stability and Growth Pact' of the European Union is a treaty that 1. limits the levels of the budgetary deficit of the countries of the European Union 2. makes the countries of the European Union to share their infrastructure facilities 3. enables the countries of the European Union to share their technologies How many of the above statements are correct?

  1. (a)Only one
  2. (b)Only two
  3. (c)All three
  4. (d)None
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Official answer(a) Only one

2020 · Q6Indian EconomyFiscal Policy & Budgetmoderate

Along with the Budget, the Finance Minister also places other documents before the Parliament which include ‘The Macro Economic Framework Statement’. The aforesaid document is presented because this is mandated by

  1. (a)Long standing parliamentary convention
  2. (b)Article 112 and Article 110(1) of the Constitution of India
  3. (c)Article 113 of the Constitution of India
  4. (d)Provisions of the Fiscal Responsibility and Budget Management Act, 2003
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Official answer(d) Provisions of the Fiscal Responsibility and Budget Management Act, 2003

2018 · Q9Indian EconomyFiscal Policy & Budgetdifficult

Consider the following statements : 1. The Fiscal Responsibility and Budget Management (FRBM) Review Committee Report has recommended a debt to GDP ratio of 60% for the general (combined) government by 2023, comprising 40% for the Central Government and 20% for the State Governments. 2. The Central Government has domestic liabilities of 21% of GDP as compared to that of 49% of GDP of the State Governments. 3. As per the Constitution of India, it is mandatory for a State to take the Central Government's consent for raising any loan if the former owes any outstanding liabilities to the latter. Which of the statements given above is/are correct ?

  1. (a)1 only
  2. (b)2 and 3 only
  3. (c)1 and 3 only
  4. (d)1, 2 and 3
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Official answer(c) 1 and 3 only

2017 · Q20Indian EconomyFiscal Policy & Budgetmoderate

With reference to the 'Prohibition of Benami Property Transactions Act, 1988 (PBPT Act)', consider the following statements : 1. A property transaction is not treated as a benami transaction if the owner of the property is not aware of the transaction. 2. Properties held benami are liable for confiscation by the Government. 3. The Act provides for three authorities for investigations but does not provide for any appellate mechanism. Which of the statements given above is/are correct ?

  1. (a)1 only
  2. (b)2 only
  3. (c)1 and 3 only
  4. (d)2 and 3 only
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Official answer(b) 2 only

2012 · Q33Indian EconomyFiscal Policy & Budgetdifficult

Which of the following is/are among the noticeable features of the recommendations of the Thirteenth Finance Commission? 1. A design for the Goods and Services Tax, and a compensation package linked to adherence to the proposed design 2. A design for the creation of lakhs of jobs in the next ten years in consonance with India's demographic dividend 3. Devolution of a specified share of central taxes to local bodies as grants Select the correct answer using the codes given below :

  1. (a)1 only
  2. (b)2 and 3 only
  3. (c)1 and 3 only
  4. (d)1, 2 and 3
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Official answer(c) 1 and 3 only

2011 · Q8Indian EconomyFiscal Policy & Budgeteasy

Which one of the following statements appropriately describes the “fiscal stimulus”?

  1. (a)It is a massive investment by the Government in manufacturing sector to ensure the supply of goods to meet the demand surge caused by rapid economic growth
  2. (b)It is an intense affirmative action of the Government to boost economic activity in the country
  3. (c)It is Government’s intensive action on financial institutions to ensure disbursement of loans to agriculture and allied sectors to promote greater food production and contain food inflation
  4. (d)It is an extreme affirmative action by the Government to pursue its policy of financial inclusion
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Official answer(b) It is an intense affirmative action of the Government to boost economic activity in the country