Kerala SSLC · Social Science · Class 10
Public Revenue and Expenditure: Important Questions with Answers
These are 10 important multiple-choice questions from the Kerala SSLC Social Science chapter “Public Revenue and Expenditure” (Kerala SCERT syllabus). Each one shows the correct answer and a short explanation of why it is right. Try answering before you read the answer. ExamSummary has 10 practice questions on this chapter in total.
Q1.Which of the following constitutes the primary source of public revenue for the government?
- A)Donations from citizens
- B)Taxes collected from citizens
- C)Loans from foreign countries
- D)Sale of private land
Answer: B) Taxes collected from citizens
Taxes form the largest share of public revenue, providing the essential funds required for public services and development. While loans and asset sales occur, they are supplementary compared to the consistent inflow from taxation.
Q2.Identify the type of tax where the burden cannot be shifted to another person.
- A)Indirect Tax
- B)Direct Tax
- C)Customs Duty
- D)Service Tax
Answer: B) Direct Tax
Direct taxes like income tax are paid directly by the individual or entity to the government and cannot be passed on to others. Indirect taxes, conversely, can be shifted to consumers through higher prices on goods and services.
Q3.Which of the following is an example of Revenue Expenditure?
- A)Construction of a school building
- B)Payment of salaries to government employees
- C)Purchase of machinery
- D)Building a road
Answer: B) Payment of salaries to government employees
Revenue expenditure involves recurring payments that do not create physical assets, such as salaries, pensions, and interest payments. Capital expenditure, on the other hand, is used for creating assets or reducing liabilities.
Q4.What is the main purpose of the Goods and Services Tax (GST)?
- A)To increase military spending
- B)To replace multiple indirect taxes with a unified system
- C)To collect direct income tax
- D)To fund local panchayat elections
Answer: B) To replace multiple indirect taxes with a unified system
GST was introduced to subsume various central and state indirect taxes into a single national market tax to simplify compliance. It aims to remove the cascading effect of taxes and create a unified common market.
Q5.When the total expenditure of the government exceeds its total receipts, it results in:
- A)Budget Surplus
- B)Fiscal Deficit
- C)Trade Deficit
- D)Revenue Surplus
Answer: B) Fiscal Deficit
A fiscal deficit occurs when the government spends more than it earns in revenue and non-debt capital receipts during a financial year. This gap is typically financed through borrowing from the public or institutions.
Q6.Which authority is responsible for preparing the Union Budget of India?
- A)Reserve Bank of India
- B)Ministry of Finance
- C)Election Commission
- D)Supreme Court
Answer: B) Ministry of Finance
The Ministry of Finance, under the leadership of the Finance Minister, prepares and presents the annual budget to the Parliament. The RBI manages monetary policy, while the EC handles election administration.
Q7.Which tax is primarily collected by Local Self Governments in Kerala?
- A)Income Tax
- B)Corporate Tax
- C)Property Tax
- D)Customs Duty
Answer: C) Property Tax
Local bodies like Panchayats and Municipalities levy property tax on buildings and lands within their specific jurisdiction. Income and customs taxes are exclusively levied by the Central Government.
Q8.Which principle suggests that taxes should be levied according to a citizen's ability to pay?
- A)Equity
- B)Certainty
- C)Convenience
- D)Efficiency
Answer: A) Equity
The principle of equity implies that those with higher incomes should contribute a larger proportion of their earnings as tax. This ensures fairness in the distribution of the tax burden across society.
Q9.Capital Expenditure typically includes spending on:
- A)Interest payments
- B)Subsidies
- C)Creation of physical assets
- D)Administrative costs
Answer: C) Creation of physical assets
Capital expenditure is incurred for creating long-term assets like infrastructure, roads, or machinery, or for reducing liabilities. Interest payments and administrative costs fall under revenue expenditure categories.
Q10.Why does the government impose indirect taxes on goods like tobacco and alcohol?
- A)To encourage their consumption
- B)To discourage harmful consumption and raise revenue
- C)To lower production costs
- D)To support local farmers
Answer: B) To discourage harmful consumption and raise revenue
These taxes act as 'sin taxes' designed to discourage unhealthy habits while simultaneously generating significant revenue for the exchequer. They help internalize the social costs associated with these products.