Public Finance Set 6 MCQs

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.