On This Page

This set of Public Finance Multiple Choice Questions & Answers (MCQs) focuses on Public Finance Set 6

Q1 | The ratio of change in the national income in relation to the change in government spending thatcauses it is referred to as:
  • fiscal multiplier
  • spending ratio
  • expenditure ratio
  • cost multiplier
Q2 | Which of the following occurs when all taxes and other revenues exceed governmentexpenditures for a year?
  • public debt
  • budget surplus
  • balanced budget
  • budget deficit
Q3 | Public goods have two criteria, one of which is non-excludability. What does that mean?
  • it is not possible to exclude individuals from consumption.
  • it is not possible to produce them without externalities
  • consumption by one does not affect consumption of others
  • a and c.
Q4 | The role of the Finance Commission in Central-State fiscal relations has been undermined by
  • the state governments
  • the zonal councils
  • the planning commission
  • the election commission
Q5 | The term ‘Performance Budget’ was coined by
  • administrative reforms commission of india
  • second hoover commission of usa
  • estimates committee of india
  • first hoover commission of usa
Q6 | If the public debt can be financed without adding to inflation or causing interest rates to rise, it issaid to be:
  • only a burden on future generations.
  • in primary balance
  • sustainable
  • following the golden rule of the public finances.
Q7 | Progressive Tax System is that system in which what happens in the rate of tax if there is anincrease in income?
  • destruction
  • becomes equal
  • growth
  • becomes unequal
Q8 | Statutory incidence of a tax deals with
  • the amount of revenue left over after taxes.
  • the amount of taxes paid after accounting for inflation.
  • the person(s) legally responsible for paying the tax.
  • the amount of tax revenue generated after a tax is imposed.
Q9 | Who deals with income and expenditure of public authorities?
  • public finance
  • private finance
  • local govt
  • none of these
Q10 | Unfunded debts are those debts which are paid back within …………
  • two year
  • one year
  • three year
  • six months
Q11 | Which one of the following is not a feature of private finance:
  • balancing of income and expenditure
  • secrecy
  • saving some part of income
  • publicity
Q12 | Government budget is balanced when
  • govt. expenditure outstrips tax receipts
  • govt. tax receipts outstrips expenditure
  • govt. expenditure equals tax revenues
  • none of the above
Q13 | The government can collect funds from
  • taxes
  • fees
  • prices of public goods
  • all the three
Q14 | Progressive taxes:
  • increase government revenue
  • bring equality in distribution of incomes
  • act as penalty for rich people
  • both a and b
Q15 | The most important source of revenue to the states is
  • sales tax
  • service tax
  • excise duty
  • none of the above
Q16 | The tax levied on the interstate trade of goods is
  • sales tax
  • excise tax
  • service tax
  • central sales tax
Q17 | Which of the following taxes is/are withdrawn or abolished?
  • interest tax
  • estate duty
  • gift tax
  • all the above
Q18 | ………………...is that process in which taxpayer tries to shift burden of tax on others.
  • impact of tax
  • shifting of tax
  • incidence of tax
  • elasticity of tax
Q19 | Shifting of tax depends on ..............of goods.
  • elasticity
  • quality
  • quantity
  • durability
Q20 | The tax levied by the union government on income of individuals is known as
  • personal income tax
  • interest tax
  • wealth tax
  • corporation tax
Q21 | The tax on net income of companies is
  • personal income tax
  • interest tax
  • wealth tax
  • corporation tax
Q22 | All type of income received to government is called .............. income.
  • private
  • public
  • company
  • partnership
Q23 | The difference between total expenditure and total receipts is
  • fiscal deficit
  • budget deficit
  • primary deficit
  • revenue deficit
Q24 | Lump sum taxes
  • create no excess burden.
  • are not as widely used as other forms of taxation.
  • generally lack a sense of equity.
  • all of the above
Q25 | Externalities can be positive because
  • marginal damages do not last over time.
  • utility can be impacted positively as well as negatively.
  • there is no concept for marginal benefit.
  • positive externalities are subsidies.