McqMate
| 1. |
When expenditure exceeds total tax revenue, it is called: |
| A. | surplus budget |
| B. | balanced budget |
| C. | deficit budget |
| D. | none of these |
| Answer» C. deficit budget | |
| 2. |
A pure private good is subject to: |
| A. | non exclusion |
| B. | exclusion |
| C. | low satisfaction |
| D. | none of thse |
| Answer» B. exclusion | |
| 3. |
Which of the following is not a fiscal instrument? |
| A. | open market operations |
| B. | public expenditure |
| C. | taxation |
| D. | none of these |
| Answer» A. open market operations | |
| 4. |
An increase in tax rate when tax base expands represents: |
| A. | progressive taxation |
| B. | regressive taxation |
| C. | proportional taxation |
| D. | none of these |
| Answer» A. progressive taxation | |
| 5. |
The main difference between Public and Private Finance is: |
| A. | balance of income‐expenditure |
| B. | coerciveness of fiscal power to raise income: |
| C. | dissaving |
| D. | borrowings |
| Answer» A. balance of income‐expenditure | |
| 6. |
The name of the Chairman of the 11th Finance Commission |
| A. | k.c. pant |
| B. | a.m. kushro |
| C. | r. j. chelliah |
| D. | n.k.p. salve |
| Answer» A. k.c. pant | |
| 7. |
Income tax is based on the principle of: |
| A. | ability to pay |
| B. | willingness to pay |
| C. | benefits received |
| D. | none of these |
| Answer» A. ability to pay | |
| 8. |
The Principle of Maximum Social Advantage is associated with: |
| A. | dalton |
| B. | pigou |
| C. | seligman |
| D. | hicks |
| Answer» A. dalton | |
| 9. |
Which is not the characteristic of a tax? |
| A. | import content |
| B. | compulsory payment |
| C. | non –compulsory payment |
| D. | punishment to tax evader |
| Answer» C. non –compulsory payment | |
| 10. |
Special assessment means: |
| A. | general tax on all people |
| B. | gift tax |
| C. | a tax for specific benefit conferred |
| D. | none of these |
| Answer» C. a tax for specific benefit conferred | |
| 11. |
Classical canons of taxation are propounded by: |
| A. | adam smith |
| B. | bastable |
| C. | dalton |
| D. | keynes |
| Answer» A. adam smith | |
| 12. |
The Kelkar Proposals are concerned with: |
| A. | recommendations for re4forms in the power sector |
| B. | recommendations for tax reforms |
| C. | guidelines for the privatization of public sector undertakings |
| D. | none of the above |
| Answer» B. recommendations for tax reforms | |
| 13. |
Value Added Tax is: |
| A. | direct tax |
| B. | indirect tax |
| C. | progressive tax |
| D. | none of these |
| Answer» B. indirect tax | |
| 14. |
In the case of direct tax, impact and incidence are on: |
| A. | different person |
| B. | same person |
| C. | sellers |
| D. | none of these |
| Answer» B. same person | |
| 15. |
The direct violation of Tax law is called: |
| A. | tax evasion |
| B. | tax avoidance |
| C. | tax rebate |
| D. | none of these |
| Answer» A. tax evasion | |
| 16. |
The final resting place of the burden of tax is called: |
| A. | tax avoidance |
| B. | tax evasion |
| C. | impact |
| D. | incidence |
| Answer» D. incidence | |
| 17. |
Incidence of tax refers to: |
| A. | initial resting place of the burden of tax |
| B. | final resting place of the burden of tax |
| C. | both (a) and (b) |
| D. | none of these |
| Answer» B. final resting place of the burden of tax | |
| 18. |
A tax levied at 5 percent on the first Rs. 10,000 of income, 10 percent on the next Rs 20,000 and 12 percent on the next Rs 30,000 would be: |
| A. | progressive |
| B. | degressive |
| C. | regressive |
| D. | proportional |
| Answer» A. progressive | |
| 19. |
Which of the following taxes is the most likely to be regressive? |
| A. | sales tax on mobile phone |
| B. | excise duties on kerosene |
| C. | import duties on electronic goods |
| D. | entrainment tax |
| Answer» B. excise duties on kerosene | |
| 20. |
Impact of tax refers to: |
| A. | initial resting place of the burden of tax |
| B. | tax evasion |
| C. | the final money burden of tax |
| D. | none of these |
| Answer» A. initial resting place of the burden of tax | |
| 21. |
Fiscal policy is the policy of: |
| A. | rbi |
| B. | nabard |
| C. | government |
| D. | all the above |
| Answer» C. government | |
| 22. |
The principle of judging fiscal measures by the way they work is called: |
| A. | personal finance |
| B. | public finance |
| C. | functional finance |
| D. | local finance |
| Answer» C. functional finance | |
| 23. |
When individuals with unequal tax paying ability should be taxed unequally in order to equalise sacrifice is called: |
| A. | horizontal equity |
| B. | vertical equity |
| C. | tax paying ability |
| D. | none of these |
| Answer» C. tax paying ability | |
| 24. |
The following is an example of direct taxes: |
| A. | sales tax |
| B. | income tax |
| C. | estate duties |
| D. | toll tax |
| Answer» B. income tax | |
| 25. |
If the rate of tax falls with an increase in income, it is called: |
| A. | proportional tax |
| B. | progressive tax |
| C. | regressive tax |
| D. | none of these |
| Answer» C. regressive tax | |
| 26. |
Which is the method of financial adjustment between Centre and States? |
| A. | tax sharing |
| B. | grant‐in‐aid |
| C. | public debt |
| D. | federal finance |
| Answer» A. tax sharing | |
| 27. |
Who suggested an expenditure tax as an alternative to income tax? |
| A. | musgrave |
| B. | galbraith |
| C. | dalton |
| D. | kaldor |
| Answer» D. kaldor | |
| 28. |
Budget is an instrument of: |
| A. | monetary policy |
| B. | fiscal policy |
| C. | trade policy |
| D. | exchange rate policy |
| Answer» B. fiscal policy | |
| 29. |
The concept of functional finance was developed by: |
| A. | j.m. keynes |
| B. | a.p. lerner |
| C. | kaldor |
| D. | pigou |
| Answer» B. a.p. lerner | |
| 30. |
The modern state is: |
| A. | laissez –faire state |
| B. | welfare state |
| C. | aristocratic state |
| D. | police state |
| Answer» B. welfare state | |
| 31. |
According to Musgrave the major functions of public finance is: |
| A. | allocative function |
| B. | distributive function |
| C. | stabilisation function |
| D. | all the above |
| Answer» D. all the above | |
| 32. |
Who is the author of the book “The Theory of Public Finance”? |
| A. | dalton |
| B. | r.a. musgrave |
| C. | a.r. prest |
| D. | harvey rosen |
| Answer» B. r.a. musgrave | |
| 33. |
A criterion by which public goods are distinguished from private goods: |
| A. | exclusion principle |
| B. | externality principle |
| C. | public choice principle |
| D. | none of the above |
| Answer» A. exclusion principle | |
| 34. |
Who was the first to recommend the adoption of an expenditure tax for India? |
| A. | k.n. raj |
| B. | paul krugman |
| C. | raja j. chelliah |
| D. | n. kaldor |
| Answer» D. n. kaldor | |
| 35. |
The controlling authority of Government expenditure is: |
| A. | rbi |
| B. | planning commission |
| C. | ministry of finance |
| D. | finance commission |
| Answer» C. ministry of finance | |
| 36. |
The idea of ‘Democratic Decentralization’ in India was popularized by: |
| A. | a.d. gorwala committee, 1951 |
| B. | b.r. mehta committee, 1957 |
| C. | ashok mehta committee, 1978 |
| D. | none of these |
| Answer» C. ashok mehta committee, 1978 | |
| 37. |
Which one of the following is the most acceptable theory of taxation: |
| A. | benefit theory |
| B. | cost of service theory |
| C. | ability to pay theory |
| D. | none of these |
| Answer» C. ability to pay theory | |
| 38. |
The incidence of tax refers to: |
| A. | the level and rate of taxation |
| B. | who ultimately pays the tax |
| C. | the growth of taxation |
| D. | the way in which tax is collected |
| Answer» B. who ultimately pays the tax | |
| 39. |
The theory of fiscal policy derives from |
| A. | principle of sound finance |
| B. | n.i. analysis |
| C. | welfare economics |
| D. | none of these |
| Answer» A. principle of sound finance | |
| 40. |
The most important source of public revenue is |
| A. | fees |
| B. | commercial revenue |
| C. | tax |
| D. | fines & penalties |
| Answer» C. tax | |
| 41. |
Fiscal Federalism refers to |
| A. | sharing of political power between centre and states |
| B. | organising and implementing economic plans |
| C. | division of economic functions and resources among different layers of govt. |
| D. | none of these |
| Answer» C. division of economic functions and resources among different layers of govt. | |
| 42. |
Which one of the following is an optional function of Government? |
| A. | defense |
| B. | old age security |
| C. | law and order |
| D. | none of these |
| Answer» B. old age security | |
| 43. |
Principle of sound finance refers to |
| A. | maximum government spending |
| B. | minimum government spending |
| C. | revenue expenditure balanced at the minimum level |
| D. | balance between tax and spending |
| Answer» C. revenue expenditure balanced at the minimum level | |
| 44. |
Private goods are characterized by |
| A. | application of exclusion principle |
| B. | rivalry in consumption |
| C. | payment of prices |
| D. | all the above |
| Answer» D. all the above | |
| 45. |
Tax refers to 10 |
| A. | compulsory contribution |
| B. | payment by the people to government |
| C. | no direct return for the payment |
| D. | all the above |
| Answer» B. payment by the people to government | |
| 46. |
. Pump priming is |
| A. | injection of purchasing power into the public through government spending |
| B. | withdrawal of purchasing power from the public |
| C. | balancing revenue and expenditure |
| D. | none of the above |
| Answer» A. injection of purchasing power into the public through government spending | |
| 47. |
Merit goods means |
| A. | private goods |
| B. | public goods |
| C. | subsidized private goods |
| D. | none of these |
| Answer» B. public goods | |
| 48. |
The most important aim of fiscal policy in a developing country is |
| A. | economic stability |
| B. | economic development |
| C. | regional balance |
| D. | none of these |
| Answer» B. economic development | |
| 49. |
The income of the government through all its sources is called |
| A. | public expenditure |
| B. | public revenue |
| C. | public finance |
| D. | none of these |
| Answer» B. public revenue | |
| 50. |
Which of the following are indirect taxes? |
| A. | customs duties |
| B. | excise duties |
| C. | sales tax |
| D. | all the above |
| Answer» D. all the above | |
| 51. |
The Finance Commission is appointed in every |
| A. | 3 year |
| B. | 4 year |
| C. | 5 year |
| D. | 6 year |
| Answer» C. 5 year | |
| 52. |
The maximum effect of direct taxes is on |
| A. | price of food |
| B. | income |
| C. | capital goods |
| D. | consumer goods |
| Answer» B. income | |
| 53. |
The Wanchoo Committee (1971) probed into |
| A. | direct taxes |
| B. | indirect taxes |
| C. | agricultural holding tax |
| D. | non‐tax revenue |
| Answer» A. direct taxes | |
| 54. |
Modvat means |
| A. | modified value added tax |
| B. | moderate value added tax |
| C. | modest value added tax |
| D. | modern value added tax |
| Answer» A. modified value added tax | |
| 55. |
The revenue of the State Government is raised from the following sources except one, which is that? |
| A. | land revenue |
| B. | agricultural income tax |
| C. | entertainment tax |
| D. | expenditure tax |
| Answer» D. expenditure tax | |
| 56. |
The Finance Commission does all the following functions except one, which is that? |
| A. | works out allocation of taxes in the divisible pool |
| B. | looks into financial relations between the centre and the states |
| C. | allocates grants ‐ in – aid to the states and union territories |
| D. | assist the planning commission in making 5 year plans. |
| Answer» D. assist the planning commission in making 5 year plans. | |
| 57. |
Primary deficit means: |
| A. | fiscal deficit‐ interest |
| B. | revenue deficit‐interest payments |
| C. | fiscal deficit+ revenue deficit |
| D. | budgetary deficit |
| Answer» A. fiscal deficit‐ interest | |
| 58. |
Non‐Plan Grants are determined by |
| A. | planning commission |
| B. | finance commission |
| C. | central government |
| D. | state government |
| Answer» C. central government | |
| 59. |
Public Debt Management refers to |
| A. | terms of new bonds |
| B. | proportion of different components of public debt |
| C. | maturity |
| D. | all the above |
| Answer» D. all the above | |
| 60. |
Public Expenditure increases |
| A. | interest rate |
| B. | employment |
| C. | exports |
| D. | imports |
| Answer» B. employment | |
| 61. |
Central Assistance for State and UT plan is a part of |
| A. | plan expenditure |
| B. | revenue expenditure |
| C. | non‐plan expenditure |
| D. | none of the above |
| Answer» C. non‐plan expenditure | |
| 62. |
There is a view that reduced rates on income tax would lead to a significant rise in income tax revenue. This view has been attributed to |
| A. | herbert simon |
| B. | arthur laffer |
| C. | robert lucas |
| D. | j.b. say |
| Answer» B. arthur laffer | |
| 63. |
Functional Finance functions through |
| A. | buying and selling |
| B. | giving and taking |
| C. | lending and borrowing |
| D. | all the above |
| Answer» D. all the above | |
| 64. |
The ideal system of public Finance is one where the net benefit is |
| A. | maximum |
| B. | minimum |
| C. | zero |
| D. | infinity |
| Answer» A. maximum | |
| 65. |
The principle of Maximum Social Advantage is connected with |
| A. | taxation |
| B. | expenditure |
| C. | public debt |
| D. | both (a) and (b) |
| Answer» B. expenditure | |
| 66. |
Economic functions of the government are all the following EXCEPT to . |
| A. | Control the price level of public goods. |
| B. | Create a stable economic environment. |
| C. | Increase the level of education. |
| D. | Distribute income and wealth. |
| Answer» C. Increase the level of education. | |
| 67. |
Which of the following does NOT determine the nature of Public Economics? |
| A. | Public economics studies the government and how its policies affect the economy. |
| B. | Public economics is the study of government policy through the lens of economic efficiency and equity. |
| C. | Public economics builds on the theory of welfare economics and is ultimately used as a tool to improve social |
| D. | Public Economics studies the behaviour of private firms and is called economics of Priavte Sector. |
| Answer» D. Public Economics studies the behaviour of private firms and is called economics of Priavte Sector. | |
| 68. |
Which of the following describes the situation where all taxes and other revenues are less than expenditures during a given period? |
| A. | Budget Deficit. |
| B. | Budget Surplus. |
| C. | Balanced Budget. |
| D. | Public Debt. |
| Answer» A. Budget Deficit. | |
| 69. |
The Fundamental Theorem of Welfare Economics: |
| A. | Shows that the allocation of resources generated by a complete system of perfectly competitive markets results in all consumers attaining the same utility level. |
| B. | Refers to the biblical observation that "the poor ye shall always have with you." |
| C. | Implies that no intervention in the workings of markets can be justified on efficiency grounds. |
| D. | Holds that the allocation of resources generated by a complete system of perfectly competitive markets is Pareto efficient. |
| Answer» D. Holds that the allocation of resources generated by a complete system of perfectly competitive markets is Pareto efficient. | |
| 70. |
If the economy is in an inflationary period, what action would Fiscal Policy most likely take? |
| A. | Decrease the discount rate. |
| B. | Increase taxes. |
| C. | Decrease taxes. |
| D. | Increase spending. |
| Answer» B. Increase taxes. | |
| 71. |
Public goods are difficult for a private market to provide due to: |
| A. | The free-rider problem. |
| B. | The Tragedy of the Commons. |
| C. | The public goods problem. |
| D. | The rivalness problem. |
| Answer» A. The free-rider problem. | |
| 72. |
Merit goods are those which, when consumed, generate positive external benefits. This is likely to mean that, in a free market economy, the good will be: |
| A. | Over-consumed. |
| B. | Over-supplied. |
| C. | Subject to VAT. |
| D. | Under-supplied. |
| Answer» D. Under-supplied. | |
| 73. |
The optimum level of economic activity and associated pollution from society's point of view occurs where: |
| A. | Marginal private benefit = Marginal private cost. |
| B. | Marginal social benefit < Marginal social cost. |
| C. | Marginal social benefit = Marginal social cost. |
| D. | Marginal social benefit > Marginal social cost. |
| Answer» C. Marginal social benefit = Marginal social cost. | |
| 74. |
If pollution by one firm results in higher production costs for another firm, this would be classified as a: |
| A. | Negative production externality. |
| B. | Negative consumption externality. |
| C. | Marginal private cost of production. |
| D. | Free Good. |
| Answer» A. Negative production externality. | |
| 75. |
In the case of a negative externality, the social marginal cost will: |
| A. | Be equal to private marginal cost. |
| B. | Exceed the private marginal cost |
| C. | Fall short of private marginal cost. |
| D. | Bear no significant relation to private marginal cost. |
| Answer» B. Exceed the private marginal cost | |
| 76. |
Printing of new currency notes and RBI borrowings by government is called: |
| A. | Government Loans. |
| B. | Government Securities. |
| C. | Government Bonds. |
| D. | Deficit Financing. |
| Answer» D. Deficit Financing. | |
| 77. |
Which of the following is not a characteristic of a tax? |
| A. | It is a compulsory payment. |
| B. | Every tax involves a sacrifice by tax payer. |
| C. | There is a quid-pro-quo between the tax payer and the Government. |
| D. | Refusal to pay tax is a punishable offence. |
| Answer» C. There is a quid-pro-quo between the tax payer and the Government. | |
| 78. |
Which of the following is not the broad component of Property Rights? |
| A. | The right to use the good. |
| B. | The right not to transfer the good to others. |
| C. | The right to earn income from the good. |
| D. | The right to enforce property rights. |
| Answer» B. The right not to transfer the good to others. | |
| 79. |
When property rights are settled by means of bargaining or negotiating terms, what has been applied? |
| A. | A good deal. |
| B. | A bad deal. |
| C. | Cloud theorem. |
| D. | Coase theorem. |
| Answer» D. Coase theorem. | |
| 80. |
Following are some of examples of Transfer Expenditure EXCEPT: |
| A. | Interest payments on public debt. |
| B. | Social infrastructure such as education, health and family welfare. |
| C. | Unemployment allowances. |
| D. | Subsidies. |
| Answer» B. Social infrastructure such as education, health and family welfare. | |
| 81. |
All other things being equal, a substantial cut in the rate of income tax in the short run is most likely to reduce: |
| A. | The government budget deficit. |
| B. | Spending on imports. |
| C. | Unemployment. |
| D. | Inflation. |
| Answer» C. Unemployment. | |
| 82. |
Which of the following is NOT the effect of taxation on production? |
| A. | Effects on the distribution of income and wealth. |
| B. | Effects on the ability to work, save and invest. |
| C. | Effects on the will to work, save and invest. |
| D. | Effects on the allocation of resources. |
| Answer» A. Effects on the distribution of income and wealth. | |
| 83. |
A tax either on consumers or on producers: |
| A. | Creates a loss only to consumers. |
| B. | Creates a loss only to producers. |
| C. | Creates a net gain for the society as a whole. |
| D. | Creates a dead weight loss for society as a whole. |
| Answer» D. Creates a dead weight loss for society as a whole. | |
| 84. |
The direct violation of Tax law is called: |
| A. | Tax Avoidance. |
| B. | Tax Rebate. |
| C. | Tax Evasion. |
| D. | Tax Incidence. |
| Answer» C. Tax Evasion. | |
| 85. |
In the case of relatively elastic demand, the money burden of tax is on: |
| A. | Entirely on seller. |
| B. | More on seller. |
| C. | Entirely on buyer. |
| D. | More on buyer. |
| Answer» B. More on seller. | |
| 86. |
With increase in urbanisation and industrialisation, the role of Government started: |
| A. | Increasing. |
| B. | Declining. |
| C. | Stagnant. |
| D. | Unstable. |
| Answer» A. Increasing. | |
| 87. |
Which of the following is NOT the subject matter of Public Finance? |
| A. | Public Revenue & Expenditure. |
| B. | Business administration. |
| C. | Public Debt. |
| D. | Fiscal Policy. |
| Answer» B. Business administration. | |
| 88. |
The most important aim of fiscal policy in a developing country is: |
| A. | Public Revenue. |
| B. | Regional balance. |
| C. | Economic stability. |
| D. | Economic development. |
| Answer» D. Economic development. | |
| 89. |
.If a good is a public good, then: |
| A. | People who do not pay can be excluded from consuming the good. |
| B. | Consumption is regulated. |
| C. | People who do not pay cannot be excluded from consuming the good. |
| D. | Consumption is deregulated. |
| Answer» C. People who do not pay cannot be excluded from consuming the good. | |
| 90. |
A market failure can best be defined as a situation where: |
| A. | Markets enable buyers to gain utility. |
| B. | Markets fail to allocate resources efficiently. |
| C. | Markets fail to enable sellers to make profits. |
| D. | Markets encourage people to take risks. |
| Answer» B. Markets fail to allocate resources efficiently. | |
| 91. |
The “Tragedy of the Commons” is: |
| A. | Discovery of corruption among members of the Society. |
| B. | Existence of Market Failure. |
| C. | Exhaustion of resources that are collectively owned. |
| D. | Outrageous crime in a Boston public park. |
| Answer» C. Exhaustion of resources that are collectively owned. | |
| 92. |
A tax that takes away a higher proportion of one's income as the income rises is termed as a: |
| A. | Progressive Tax. |
| B. | Regressive Tax. |
| C. | Proportional Tax. |
| D. | Indirect Tax. |
| Answer» A. Progressive Tax. | |
| 93. |
Loans taken by the government for purpose of war, earthquakes for covering budget deficit are: |
| A. | Productive Debts. |
| B. | Unproductive Debts. |
| C. | Voluntary Debts |
| D. | External Debts. |
| Answer» B. Unproductive Debts. | |
| 94. |
The incidence of tax refers to: |
| A. | The level and rate of taxation. |
| B. | The growth of taxation. |
| C. | The way in which tax is collected. |
| D. | Who ultimately pays the tax. |
| Answer» D. Who ultimately pays the tax. | |
| 95. |
In the case of direct tax, impact and incidence are on: |
| A. | Same person. |
| B. | Sellers. |
| C. | Different person. |
| D. | Producer. |
| Answer» A. Same person. | |
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