Deck 5: Economic Theories and Practices: Taxation, Fiscal Policy, and Public Expenditure

Question 1

According to Peackock Wiseman hypothesis, A discontinuity in the growth pattern which produces expenditure peak during social disturbances is referred to as:

A)displacement effect
B)concentration effect
C)inspection effect
D)substitution effect

Answer 1

displacement effect

Question 2

The theory of fiscal policy derives from

A)principle of sound finance
B)n.i. analysis
C)welfare economics
D)none of these

Answer 2

principle of sound finance

Question 3

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 government
D)none of these

Answer 3

division of economic functions and resources among different layers of government

Question 4

Marginal cost of providing the public goods to additional consumers is:

A)0
B)1
C)2
D)3

Question 5

Mixed goods are those goods having benefits which are:

A)rival
B)non-rival
C)both a & b
D)none of these

Question 6

Escheat is an example of

A)direct tax
B)indirect tax
C)both a & b
D)none of these

Question 7

Gift tax was introduced in the year

A)1958
B)1959
C)1960
D)1961

Question 8

_________ is a broad based and a single comprehensive tax levied on goods and services consumed in an economy

A)vat
B)cenvat
C)gst
D)none of these

Question 9

In India GST was introduced in the year

A)2016
B)2017
C)2018
D)2019

Question 10

______________________ is the first country to implement GST

A)usa
B)u k
C)canada
D)france

Question 11

In which year GST was first introduced

A)1952
B)1953
C)1954
D)1955

Question 12

The movement from older level of expenditure and taxation to a new and higher level is called

A)concentration effect
B)inspection effect
C)displacement effect
D)none of these

Question 13

The diffusion theory was associated with the name of

A)dalton
B)keynes
C)r a musgrave
D)mansfield

Question 14

The existence of economic inequalities among the states is known as

A)vertical imbalance
B)horizontal imbalance
C)parallel imbalance
D)none of these

Question 15

When expenditure exceeds total tax revenue, it is called:

A)surplus budget
B)balanced budget
C)deficit budget
D)none of these

Question 16

The Benefit Principle of taxation states that tax should be paid in proportion to:

A)income
B)expenditure
C)benefit
D)utility

Question 17

The most accepted theory of taxation in modern times:

A)benefit theory
B)cost of service
C)financial theory
D)ability theory

Question 18

In which of the following type of economy, the revenue from taxation is likely to be the least?

A)free market economy
B)keynesian economy
C)mixed economy
D)socialist economy

Question 19

The horizontal fiscal imbalance that arises in a fiscal federation is also called:

A)problem of equalisation
B)problem of efficiency
C)problem of effectiveness
D)problem of economy

Question 20

Tax revenue sharing between the federal and sub-national governments is aimed at correcting which of the following type of imbalances?

A)vertical imbalances
B)horizontal imbalances
C)diagonal imbalances
D)criss-cross imbalances

Question 21

During the process of economic development, the share of public expenditure to Gross Domestic Product tends to expand. This is called:

A)wagner's law
B)keynes law
C)adam smith's theory
D)brettonwoods law

Question 22

The principle of public expenditure that requires that Government should avoid shortfall of revenue in comparison with its expenditure is termed as

A)canon of deficit
B)canon of surplus
C)canon of elasticity
D)canon of sanction