Question: 1. A progressive income tax implies that
Answer: The rate of tax rises with a rise in income
Question: 2. A forward-shifted tax will affect
Answer: Buyers more than sellers
Question: 3. If with the increase in income, the percentage of income collected as tax remains constant, tax will be called
Answer: Proportional
Question: 4. Repayment of public debt refers to
Answer: Redemption of public debt
Question: 5. Which canon of taxation is given by Adam Smith?
Answer: Canon of economy
Question: 6. Tobin tax is a tax on
Answer: Transaction on the foreign exchange market
Question: 7. In case of deficit budget, when the deficits are covered through taxes, that budget is called
Answer: Unbalanced budget
Question: 8. Expenditure tax was introduced in India as per the recommendation of
Answer: Kaldor
Question: 9. Wealth tax was abolished in
Answer: 2015
Question: 10. According to Wiseman and Peacock, public expenditure will increase in a
Answer: Step-like manner
Question: 11. Canons of budgeting was given by
Answer: H. D. Smith
Question: 12. Concept of concentration and displacement effect in public expenditure are attributed to
Answer: Allen T. Peacock and Jack Wiseman
Question: 13. The greater the elasticity of supply, the greater is
Answer: Incidence of tax on buyers
Question: 14. The ability to pay principle of taxation is logically most consistent with the normative notion of
Answer: Vertical equality
Question: 15. Which committee recommended tax on agriculture holding in India?
Answer: Raj Committee
Question: 16. With a regressive tax, as income increases, the tax rate
Answer: Decreases
Question: 17. The principle of maximum social advantage is concerned with
Answer: Both taxation and public expenditure
Question: 18. Justice in taxation is best ensured by applying the principle of
Answer: Equal marginal sacrifice
Question: 19. Agriculture income tax is a source of revenue to
Answer: State government
Question: 20. Ad Valorem means
Answer: According to value
Question: 21. Octroi is levied and collected by
Answer: Local bodies
Question: 22. The relationship between tax collections and tax rates has been expressed by
Answer: Laffer curve
Question: 23. All taxes come under
Answer: Revenue receipt
Question: 24. The merit of zero-based budgeting is that
Answer: Expenditure is rationalized
Question: 25. The concept of Zero-Based Budgeting (ZBB) was given by
Answer: Peter A. Pyhrr
Question: 26. If interest payments are subtracted from gross fiscal deficit, the remainder will be
Answer: Gross primary deficit
Question: 27. Interest payment is an item of
Answer: Revenue expenditure
Question: 28. The basis of corporate tax is
Answer: Total turnover of the company
Question: 29. Federalism refers to a
Answer: Relationship between the national and state governments
Question: 30. What are the objectives of taxation by the Government?
Answer: Raising revenue, maintaining economic stability, and removing income disparities
Question: 31. Service tax is an example of which type of tax?
Answer: Indirect tax
Question: 32. What is an example of Transfer Payments?
Answer: Corporate income tax
Question: 33. Is there a direct quid-pro-quo between the tax payer and the government in taxation?
Answer: No, there is no quid-pro-quo between the tax payer and the government
Question: 34. What is a key characteristic of an indirect tax?
Answer: The impact and incidence are not on the same person
Question: 35. Special assessment is also known as
Answer: Betterment levy
Question: 36. Impact of a tax refers to
Answer: Immediate money burden
Question: 37. Which factor has no role in the shifting of a tax?
Answer: Income of the consumer
Question: 38. Which of the following is not a direct tax? (Income tax, Wealth tax, Gift tax, Service tax)
Answer: Service tax
Question: 39. Which of the following is an administrative non-tax revenue?
Answer: Fees
Question: 40. Gift tax is classified under which type of tax?
Answer: Direct tax
Question: 41. Generally, the nature of indirect tax is
Answer: Regressive
Question: 42. Direct taxes are usually _______ in nature.
Answer: Progressive
Question: 43. The term incidence of taxation refers to
Answer: Final burden of the tax
Question: 44. Debts which have to be paid at some specific future date are known as
Answer: Redeemable debts
Question: 45. What are the advantages of redemption of debt?
Answer: Saves government from bankruptcy, reduces cost, and saves future generations from debt pressure
Question: 46. Is interest considered a part of tax revenue?
Answer: No, interest is a non-tax revenue
Question: 47. The term fiscal federalism was introduced by
Answer: Musgrave
Question: 48. What does the theory of fiscal federalism assume?
Answer: Federal systems are efficient, help economic stability, and reduce regional income disparities
Question: 49. An empirical law regarding growing public expenditure was propounded by
Answer: Wagner
Question: 50. Productive debts are primarily raised for
Answer: Financing wars
Question: 51. External debts can be raised from
Answer: World Bank
Question: 52. Debts that are repaid at a specific future date are termed as
Answer: Redeemable debts
Question: 53. External loans can be sourced from international bodies like
Answer: WTO
Question: 54. The concept of Merit goods was developed by
Answer: Musgrave
Question: 55. Non-rival consumption is a defining feature of
Answer: Public good
Question: 56. The theory of second best was introduced by
Answer: Lipsey and Lancaster
Question: 57. Wagner’s Law states the increasing activities of the
Answer: State
Question: 58. Wiseman-Peacock studied public expenditure trends in which country during 1890-1955?
Answer: UK
Question: 59. The pure theory of public expenditure is based on
Answer: Benefit
Question: 60. Social marginal productivity criteria was developed by
Answer: A. E. Khan
Question: 61. A balanced budget means equality between
Answer: Revenue and expenditure
Question: 62. The concept of Zero-Base Budgeting was first introduced in the USA in which year?
Answer: 1964
Question: 63. Public debt is the debt owed by the
Answer: Central government
Question: 64. In a concept of budgetary deficit, which value is always greater than total revenue?
Answer: Public expenditure
Question: 65. The value of a balanced budget multiplier is always
Answer: 1
Question: 66. Which tax falls under the jurisdiction of the Central government?
Answer: Corporation tax
Question: 67. Which type of loans are important in internal debt?
Answer: Market loans
Question: 68. What is the nature of public debt growth in the Indian Economy?
Answer: Increasing
Question: 69. Fiscal Crisis was mainly carried in which period?
Answer: Planning period
Question: 70. Grants received from the World Bank are categorized as
Answer: Revenue Receipt
Question: 71. Borrowing from the public is an example of
Answer: Capital Receipt
Question: 72. Is a license fee considered a form of Tax Revenue?
Answer: No, it is a non-tax revenue
Question: 73. The sale of a public sector undertaking is categorized as
Answer: Capital Receipt
Question: 74. Existence of Centre-State economic inequalities is known as
Answer: Vertical imbalance
Question: 75. A multilevel decentralized fiscal system sharing responsibilities across central, state, and local bodies is called
Answer: Fiscal federalism
Question: 76. The system of assigning revenue sources to both Central and State Governments is referred to as
Answer: Federal finance
Question: 77. The modern state is characterized as a
Answer: Welfare state
Question: 78. Which is the most acceptable theory of taxation?
Answer: Ability to pay theory
Question: 79. Indian income tax is classified as
Answer: Direct and progressive
Question: 80. What are the main objectives of budgeting?
Answer: Planning, coordination, and control
Question: 81. The Wiseman-Peacock hypothesis strongly supports the possibility of an
Answer: Upward trend in public expenditure
Question: 82. What is a negative externality?
Answer: The hurting effect of a private action on other people
Question: 83. What does “The Tragedy of the Commons” refer to?
Answer: Exhaustion of resources that are collectively owned
Question: 84. Are traffic signs considered public goods?
Answer: Yes, traffic signs are public goods
Question: 85. Does the provision of public goods rely on market competition?
Answer: No, market competition is not required for public goods provision
Question: 86. Public goods are defined as goods for which non-payers
Answer: Cannot be excluded from consuming
Question: 87. A good whose consumption is non-rival and non-excludable is a
Answer: Public good
Question: 88. What is a classic example of a pure public good?
Answer: A radio broadcast
Question: 89. Non-rivalry is a fundamental feature of
Answer: Public goods
Question: 90. Non-excludability is a feature of
Answer: Public goods
Question: 91. Pure private goods are characterized by consumption that is
Answer: Rival and excludable
Question: 92. When consumption of a product is both rival and excludable, it is classified as a
Answer: Private good
Question: 93. A resource is non-excludable when
Answer: It is not possible to prevent someone from benefiting from it
Question: 94. An uncrowded toll road is not a pure public good because it is
Answer: Non-rival but excludable
Question: 95. A resource is excludable when
Answer: It is possible to prevent someone from enjoying its benefits
Question: 96. A resource is non-rival when
Answer: Its use by one person does not decrease the quantity available for others
Question: 97. If one person’s consumption does not reduce availability for others, the good is
Answer: Non-rival
Question: 98. The nature of federalism was historically transformed by
Answer: The Civil War
Question: 99. Cooperative federalism is characterized by
Answer: A stronger, more influential national government
Question: 100. What three concepts make up the Peacock and Wiseman Hypothesis on public expenditure?
Answer: Displacement effect, concentration effect, and inspection effect
Question: 101. According to Peacock-Wiseman hypothesis, a discontinuity in the growth pattern which produces expenditure peak during social disturbances is referred to as:
Answer: Displacement effect
Question: 102. The theory of fiscal policy derives from
Answer: Principle of sound finance
Question: 103. Fiscal Federalism refers to
Answer: Division of economic functions and resources among different layers of government
Question: 104. Marginal cost of providing the public goods to additional consumers is:
Answer: 0
Question: 105. Mixed goods are those goods having benefits which are:
Answer: Both rival and non-rival
Question: 106. Escheat is an example of
Answer: Non-tax revenue
Question: 107. Gift tax was introduced in the year
Answer: 1958
Question: 108. _________ is a broad-based and a single comprehensive tax levied on goods and services consumed in an economy
Answer: GST
Question: 109. In India, GST was introduced in the year
Answer: 2017
Question: 110. ______________________ is the first country to implement GST
Answer: France
Question: 111. In which year was GST first introduced?
Answer: 1954
Question: 112. The movement from an older level of expenditure and taxation to a new and higher level is called
Answer: Displacement effect
Question: 113. The diffusion theory of taxation was associated with the name of
Answer: Mansfield
Question: 114. The existence of economic inequalities among the states is known as
Answer: Horizontal imbalance
Question: 115. When expenditure exceeds total tax revenue, it is called:
Answer: Deficit budget
Question: 116. The Benefit Principle of taxation states that tax should be paid in proportion to:
Answer: Benefit
Question: 117. The most accepted theory of taxation in modern times:
Answer: Ability theory
Question: 118. In which of the following types of economy is the revenue from taxation likely to be the least?
Answer: Socialist economy
Question: 119. The horizontal fiscal imbalance that arises in a fiscal federation is also called:
Answer: Problem of equalisation
Question: 120. Tax revenue sharing between the federal and sub-national governments is aimed at correcting which of the following types of imbalances?
Answer: Vertical imbalances
Question: 121. In a free market economy, self-interested individuals operate through a system of mutual interdependence to promote the general benefit of society at large. Adam Smith referred to this as:
Answer: Invisible hand
Question: 122. Expenditure incurred by the Government on building durable assets, like highways, multipurpose dams, irrigation projects are in the nature of
Answer: Capital expenditure
Question: 123. Which of the following describes the situation where revenues and expenditures are equal during a given period?
Answer: Balanced budget
Question: 124. During the process of economic development, the share of public expenditure to Gross Domestic Product tends to expand. This is called:
Answer: Wagner’s law
Question: 125. The principle of public expenditure that requires that Government should avoid shortfall of revenue in comparison with its expenditure is termed as
Answer: Canon of surplus
Question: 126. The ratio of change in the national income in relation to the change in government spending that causes it is referred to as:
Answer: Fiscal multiplier
Question: 127. Which of the following occurs when all taxes and other revenues exceed government expenditures for a year?
Answer: Budget surplus
Question: 128. Public goods have two criteria, one of which is non-excludability. What does that mean?
Answer: It is not possible to exclude individuals from consumption
Question: 129. The role of the Finance Commission in Central-State fiscal relations has been undermined by
Answer: The Planning Commission
Question: 130. The term ‘Performance Budget’ was coined by
Answer: First Hoover Commission of USA
Question: 131. If the public debt can be financed without adding to inflation or causing interest rates to rise, it is said to be:
Answer: Sustainable
Question: 132. Progressive Tax System is that system in which what happens in the rate of tax if there is an increase in income?
Answer: Growth
Question: 133. Statutory incidence of a tax deals with
Answer: The person(s) legally responsible for paying the tax
Question: 134. Who deals with income and expenditure of public authorities?
Answer: Public finance
Question: 135. Unfunded debts are those debts which are paid back within ____________
Answer: One year
Question: 136. Which one of the following is not a feature of private finance:
Answer: Publicity
Question: 137. Government budget is balanced when
Answer: Government expenditure equals tax revenues
Question: 138. The government can collect funds from
Answer: All three (Taxes, fees, and prices of public goods)
Question: 139. Progressive taxes:
Answer: Increase government revenue and bring equality in distribution of incomes
Question: 140. The most important source of revenue to the states is
Answer: Sales tax / State GST
Question: 141. The tax levied on the interstate trade of goods is
Answer: Central sales tax
Question: 142. Which of the following taxes is/are withdrawn or abolished?
Answer: All the above (Interest tax, Estate duty, Gift tax)
Question: 143. _______________ is that process in which taxpayer tries to shift burden of tax on others.
Answer: Shifting of tax
Question: 144. Shifting of tax depends on ____________ of goods.
Answer: Elasticity
Question: 145. The tax levied by the union government on income of individuals is known as
Answer: Personal income tax
Question: 146. The tax on net income of companies is
Answer: Corporation tax
Question: 147. All types of income received by the government are called ____________ income.
Answer: Public
Question: 148. The difference between total expenditure and total receipts (revenue) is
Answer: Revenue deficit
Question: 149. Lump sum taxes
Answer: All of the above (Create no excess burden, are not widely used, and lack equity)
Question: 150. Externalities can be positive because
Answer: Utility can be impacted positively as well as negatively
Question: 151. The economic incidence of a unit tax is
Answer: Independent of the statutory incidence for the tax
Question: 152. A public good is
Answer: Non-rival in consumption
Question: 153. It is difficult to evade:
Answer: Direct tax
Question: 154. The main source of revenue of federal government is:
Answer: Sales tax / Customs duties
Question: 155. Who establishes the Finance Commission in India?
Answer: President
Question: 156. How many Finance Commissions have been constituted so far in India?
Answer: 15
Question: 157. Which of the following statements is not correct?
Answer: Chairman of the first finance commission was Mr. Santhanam
Question: 158. Recommendations of the first Finance Commission covered which of the following periods?
Answer: 1952-57
Question: 159. Who was the Chairman of the Seventh Finance Commission of India?
Answer: J. M. Shelat
Question: 160. Horizontal equity incorporates the notion that
Answer: Those earning equal incomes should pay the same in taxes
Question: 161. Interim budget is also known as
Answer: Both mini budget and vote on account
Question: 162. What is the biggest source of Income for the Central Government in the Union Budget 2020-21?
Answer: Borrowings and other liabilities
Question: 163. Which of the following is not a rate of tax slab in the Union Budget 2020-21?
Answer: 40%
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