Topic Details (Notes format)

Fiscal Policy and Budget

Subject: Economics

Book: Comprehensive Indian Economy

Fiscal policy involves government spending, taxation, and borrowing to steer the economy. In India, the annual Union Budget outlines revenue and expenditure plans, revealing priorities for sectors like infrastructure, agriculture, and social welfare. Concepts like revenue deficit, fiscal deficit, and primary deficit are central to gauging fiscal health. The Fiscal Responsibility and Budget Management (FRBM) Act sets targets to maintain fiscal discipline. Exam readiness requires clarity on how changes in tax structures—like GST—and public spending shape economic growth, plus an understanding of how deficits are managed through market borrowings and bond issuances.

Practice Questions

Which of the following measures is most effective in controlling inflation?

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Which of the following is a direct tax?

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What is the primary goal of a progressive tax system?

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What is the main purpose of monetary policy?

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What is “inflation targeting”?

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What is the “law of diminishing marginal utility”?

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What is the primary purpose of Special Economic Zones (SEZs)?

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What is the term for goods that are used together, such as cars and fuel?

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Which organization publishes the Human Development Index (HDI)?

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What is the objective of the Goods and Services Tax (GST)?

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