On This Page

This set of Public Finance Multiple Choice Questions & Answers (MCQs) focuses on Public Finance Set 5

Q1 | According to Peackock Wiseman hypothesis, A discontinuity in the growth pattern whichproduces expenditure peak during social disturbances is referred to as:
  • displacement effect
  • concentration effect
  • inspection effect
  • substitution effect
Q2 | The theory of fiscal policy derives from
  • principle of sound finance
  • n.i. analysis
  • welfare economics
  • none of these
Q3 | Fiscal Federalism refers to
  • sharing of political power between centre and states
  • organising and implementing economic plans
  • division of economic functions and resources among different layers of government
  • none of these
Q4 | Marginal cost of providing the public goods to additional consumers is:
  • 0
  • 1
  • 2
  • 3
Q5 | Mixed goods are those goods having benefits which are:
  • rival
  • non-rival
  • both a & b
  • none of these
Q6 | Escheat is an example of
  • direct tax
  • indirect tax
  • both a & b
  • none of these
Q7 | Gift tax was introduced in the year
  • 1958
  • 1959
  • 1960
  • 1961
Q8 | _________ is a broad based and a single comprehensive tax levied on goods and servicesconsumed in an economy
  • vat
  • cenvat
  • gst
  • none of these
Q9 | In India GST was introduced in the year
  • 2016
  • 2017
  • 2018
  • 2019
Q10 | ______________________ is the first country to implement GST
  • usa
  • u k
  • canada
  • france
Q11 | In which year GST was first introduced
  • 1952
  • 1953
  • 1954
  • 1955
Q12 | The movement from older level of expenditure and taxation to a new and higher level is called
  • concentration effect
  • inspection effect
  • displacement effect
  • none of these
Q13 | The diffusion theory was associated with the name of
  • dalton
  • keynes
  • r a musgrave
  • mansfield
Q14 | The existence of economic inequalities among the states is known as
  • vertical imbalance
  • horizontal imbalance
  • parallel imbalance
  • none of these
Q15 | When expenditure exceeds total tax revenue, it is called:
  • surplus budget
  • balanced budget
  • deficit budget
  • none of these
Q16 | The Benefit Principle of taxation states that tax should be paid in proportion to:
  • income
  • expenditure
  • benefit
  • utility
Q17 | The most accepted theory of taxation in modern times:
  • benefit theory
  • cost of service
  • financial theory
  • ability theory
Q18 | In which of the following type of economy, the revenue from taxation is likely to be the least?
  • free market economy
  • keynesian economy
  • mixed economy
  • socialist economy
Q19 | The horizontal fiscal imbalance that arises in a fiscal federation is also called:
  • problem of equalisation
  • problem of efficiency
  • problem of effectiveness
  • problem of economy
Q20 | Tax revenue sharing between the federal and sub-national governments is aimed at correctingwhich of the following type of imbalances?
  • vertical imbalances
  • horizontal imbalances
  • diagonal imbalances
  • criss-cross imbalances
Q21 | In a free market economy, self-interested individuals operate through a system of mutualinterdependence to promote the general benefit of society at large. Adam Smith referred this as:
  • invisible hand
  • direct intervention
  • collective spirit
  • private spirit
Q22 | Expenditure incurred by the Government on building durable assets, like highways, multipurposedams, irrigation projects are in the nature of
  • capital expenditure
  • revenue expenditure
  • transfer expenditure
  • unproductive expenditure
Q23 | Which of the following describes the situation where revenues and expenditures are equal duringa given period?
  • public debt
  • budget surplus
  • balanced budget
  • budget deficit
Q24 | During the process of economic development, the share of public expenditure to Gross DomesticProduct tends to expand. This is called:
  • wagner’s law
  • keynes law
  • adam smith’s theory
  • brettonwoods law
Q25 | The principle of public expenditure that requires that Government should avoid shortfall ofrevenue in comparison with its expenditure is termed as
  • canon of deficit
  • canon of surplus
  • canon of elasticity
  • canon of sanction