Class 12 Economics Important Chapter 6 Budget and the Economy

Class 12 Economics Important Chapter 6 Budget and the Economy Solutions English Medium As Per The New Syllabus to each chapter is provided in the list so that you can easily browse through different chapters ASSEB Class 12 Economics Important Solutions in English and select need one. AHSEC Class 12 Economics Additional Notes Download PDF. HS 2nd Year Economics Additional Solutions.

Class 12 Economics Important Chapter 6 Budget and the Economy

Also, you can read the NCERT book online in these sections Solutions by Expert Teachers as per Central Board of Secondary Education (CBSE) Book guidelines. ASSEB Class 12 Economics Additional Question Answer are part of All Subject Solutions. Here we have given HS 2nd Year Economics Important Solutions English Medium for All Chapters, You can practice these here.

Budget and the Economy

Chapter: 6

PART – A: INTRODUCTORY MICROECONOMICS

IMPORTANT QUESTION AND ANSWER

Short Questions Answers:

1. What is a government budget?

Ans: An annual financial statement of estimated receipts and estimated expenditure for a fiscal year (1 April–31 March) requiring Parliament’s approval.

2. State any two features of a budget.

Ans: It covers a fixed one-year period and presents estimated revenues and expenditures that need legislative approval.

3. What are public goods?

Ans: Goods that are non-excludable and non-rivalrous, e.g., street lighting and parks.

4. Define impact and incidence of tax.

Ans: Impact: on whom the tax is initially levied; Incidence: who finally bears the burden.

5. Give two objectives of a government budget.

Ans: Reallocation of resources and redistribution of income/wealth (also stability and managing public enterprises).

6. Differentiate revenue receipts and capital receipts (by obligation).

Ans: Revenue receipts create no liability and do not reduce assets; capital receipts create liability or reduce assets.

7. Give two examples of non-tax revenue.

Ans: Dividends and profits from PSUs; fees, fines, and interest receipts.

8. What is a direct tax? Give an example.

Ans: A tax whose burden cannot be shifted, e.g., personal income tax or corporate tax.

9. What is a revenue deficit?

Ans: Revenue Expenditure minus Revenue Receipts.

10. Write the formula for fiscal deficit.

Ans: Fiscal Deficit = Total Expenditure − (Revenue Receipts + Non-debt Capital Receipts).

11. What is primary deficit?

Ans: Primary Deficit = Fiscal Deficit − Interest Payments.

12. State two characteristics of revenue expenditure.

Ans: Does not create assets and does not reduce liabilities (e.g., salaries, subsidies).

13. State two characteristics of capital expenditure.

Ans: Creates assets or reduces liabilities (e.g., capital outlay, loan repayments).

14. What are debt-creating and non-debt capital receipts?

Ans: Debt-creating: borrowings; Non-debt: disinvestment and recovery of loans.

15. How can a deficit be financed?

Ans: Borrowings (domestic/external), monetization (central bank), disinvestment, and fiscal consolidation (raise taxes/cut spending).