What is the main goal of a national budget?
a) To reduce government debt
b) To allocate government spending across various sectors
c) To increase taxes
d) To control inflation
What is a fiscal deficit?
a) The total revenue collected by the government
b) The difference between government expenditure and revenue
c) The amount spent on foreign aid
d) The total value of government assets
Which of the following is a cause of fiscal deficits?
a) Reduced government expenditure
b) Increased tax collection
c) Increased government borrowing and spending
d) Economic growth
What does a budget surplus indicate?
a) Government revenue exceeds expenditure
b) Government expenditure exceeds revenue
c) No change in the financial status
d) Increase in government debt
Which of the following is an example of current expenditure in a government budget?
a) Infrastructure development
b) Payment of government salaries
c) Purchase of capital assets
d) Repayment of loans
What is a common consequence of persistent fiscal deficits?
a) Reduced government spending
b) Economic instability
c) Decreased taxation
d) Lower inflation rates
Which of the following is typically included in a government’s capital expenditure?
a) Subsidies to businesses
b) Interest payments on debt
c) Construction of roads and schools
d) Welfare programs for the poor
What is the relationship between fiscal deficit and national debt?
a) A fiscal deficit increases national debt
b) A fiscal deficit decreases national debt
c) There is no relationship between them
d) A fiscal deficit results in lower national debt
Which of the following is NOT a primary objective of fiscal policy?
a) To control inflation
b) To stimulate economic growth
c) To regulate interest rates
d) To reduce unemployment
What is the main function of the Finance Ministry in Pakistan with respect to budgeting?
a) Setting tax rates
b) Allocating funds to different government departments
c) Monitoring government projects
d) Managing public debt
Which of the following is an effect of a large fiscal deficit?
a) Economic contraction
b) Increased public sector investment
c) Increased inflationary pressures
d) Decrease in government borrowing
What is the key feature of a balanced budget?
a) Government spending equals government revenue
b) Government spending is greater than government revenue
c) Government debt is reduced
d) Taxes are reduced
What type of deficit refers to the shortfall between a government’s total expenditure and its revenue, excluding borrowing?
a) Structural deficit
b) Primary deficit
c) Fiscal deficit
d) Budget surplus
Which of the following actions can help reduce a fiscal deficit?
a) Increasing public sector wages
b) Raising taxes
c) Reducing infrastructure investment
d) Increasing government subsidies
What is the purpose of the government’s budgetary surplus?
a) To reduce public debt
b) To increase government spending
c) To pay for social welfare programs
d) To increase fiscal deficit
Which of the following best describes fiscal consolidation?
a) Increasing government debt
b) Reducing the fiscal deficit and improving fiscal health
c) Increasing government expenditure
d) Expanding government subsidies
How is a fiscal deficit typically financed in a country like Pakistan?
a) Through domestic borrowing
b) Through international trade
c) By increasing foreign aid
d) By reducing taxes
What is the main difference between fiscal deficit and budget deficit?
a) There is no difference; they are the same
b) Budget deficit includes government borrowing, whereas fiscal deficit does not
c) Fiscal deficit includes borrowing and non-borrowed funds, while budget deficit only includes borrowed funds
d) Fiscal deficit includes borrowed funds, while budget deficit includes non-borrowed funds
Which of the following could be a consequence of cutting government spending to reduce a fiscal deficit?
a) Increase in inflation
b) Higher economic growth
c) Increased unemployment
d) Increase in consumer demand
What does “deficit financing” refer to?
a) Using future revenue to pay for current expenditures
b) Financing government expenditures through borrowing or printing money
c) Reducing taxes to increase economic growth
d) Selling government-owned assets to raise funds
What is the term for the difference between the government’s total expenditure and the total revenue, including the net borrowing?
a) Budget deficit
b) Primary deficit
c) Fiscal deficit
d) National debt
What would happen if a government consistently runs a high fiscal deficit?
a) Increase in foreign investment
b) Decrease in inflation
c) Increased national debt
d) Higher economic growth
Which of the following fiscal policies can help a country reduce its fiscal deficit?
a) Lowering taxes on capital gains
b) Reducing public sector wages and benefits
c) Increasing subsidies for key industries
d) Expanding government borrowing
Which of the following is an indirect method used by governments to reduce fiscal deficits?
a) Imposing direct taxes on individuals
b) Privatizing state-owned enterprises
c) Borrowing from international financial institutions
d) Reducing government subsidies
What is the significance of a “fiscal stimulus” in terms of the government budget?
a) To increase the fiscal deficit temporarily in order to stimulate economic activity
b) To reduce government spending for balancing the budget
c) To impose higher taxes to reduce fiscal deficits
d) To reduce public debt
Which of the following could help a government manage its fiscal deficit more effectively?
a) Increase import taxes
b) Increase direct government borrowing
c) Implement stricter tax compliance measures
d) Reduce government transparency
Which of the following is a major source of government revenue?
a) Borrowing from international organizations
b) Tax collection
c) Selling government assets
d) Increasing inflation
What is the purpose of creating a “contingency fund” in a national budget?
a) To finance day-to-day operations of government departments
b) To provide funds for emergency or unforeseen expenditure
c) To pay off government debt
d) To reduce fiscal deficits
What is “deficit financing” often associated with in developing economies?
a) Economic stability
b) Inflation and devaluation of currency
c) Increased foreign reserves
d) Lower public debt
Which of the following is the primary objective of fiscal policy in the context of a fiscal deficit?
a) To reduce income inequality
b) To stabilize the economy by controlling the deficit
c) To promote international trade
d) To increase government consumption
