Question 1

When expenditure exceeds total tax revenue, it is called:

Accepted Answer

When expenditure exceeds total tax revenue, it results in a deficit budget. This means the government is spending more than it is earning in tax revenue.

Question 2

A pure private good is subject to:

Accepted Answer

A pure private good is subject to exclusion because it is characterized by the ability to exclude non-payers from consuming the good.

Question 3

Which of the following is not a fiscal instrument?

Accepted Answer

Open market operations are monetary policy instruments used by central banks to control the money supply, not fiscal instruments. Fiscal instruments include public expenditure and taxation, which are related to government spending and revenue, respectively.

Question 4

An increase in tax rate when tax base expands represents:

Accepted Answer

Progressive taxation is characterized by an increase in the tax rate as the tax base (income or wealth) expands. This means that individuals or entities with higher incomes or wealth pay a higher percentage of their income or wealth in taxes compared to those with lower incomes.

Question 5

The main difference between Public and Private Finance is:

Accepted Answer

The answer of The main difference between Public and Private...

Question 6

The name of the Chairman of the 11th Finance Commission

Accepted Answer

K.C. Pant was the Chairman of the 11th Finance Commission of India.

Question 7

Income tax is based on the principle of:

Accepted Answer

Income tax is based on the principle of "ability to pay," meaning that individuals are taxed based on their earnings or financial capacity.

Question 8

The Principle of Maximum Social Advantage is associated with:

Accepted Answer

The Principle of Maximum Social Advantage is associated with Dalton.

Question 9

Which is not the characteristic of a tax?

Accepted Answer

Taxes are compulsory payments to the government without direct benefit to the payer, making option C (non-compulsory payment) incorrect as a characteristic of a tax.

Question 10

Special assessment means:

Accepted Answer

Special assessment is a charge levied by the government on specific parcels of real estate to fund public projects that directly benefit the property owners, such as improvements to streets, sidewalks, or sewer lines. It is not a general tax on all people, a gift tax, or none of these options.

Question 11

Classical canons of taxation are propounded by:

Accepted Answer

The classical canons of taxation, which include equity, certainty, convenience, and economy, were propounded by Adam Smith in his seminal work, "The Wealth of Nations." These principles have guided the development of tax systems around the world.

Question 12

The Kelkar Proposals are concerned with:

Accepted Answer

The Kelkar Proposals refer to recommendations made for tax reforms in India, aimed at simplifying the tax structure and improving compliance.

Question 13

Value Added Tax is:

Accepted Answer

Value Added Tax (VAT) is considered an indirect tax because it is collected by businesses on behalf of the government from the consumer at the point of sale of goods and services.

Question 14

In the case of direct tax, impact and incidence are on:

Accepted Answer

In the case of direct taxes, both the impact and incidence are on the same person, as these taxes are levied directly on the income or wealth of individuals or organizations.

Question 15

The direct violation of Tax law is called:

Accepted Answer

Tax evasion refers to the illegal act of not paying taxes that are owed, directly violating tax laws.

Question 16

The final resting place of the burden of tax is called:

Accepted Answer

The term "incidence" refers to the final resting place of the burden of tax, indicating who ultimately bears the cost of the tax.

Question 17

Incidence of tax refers to:

Accepted Answer

The incidence of tax refers to the final resting place of the burden of tax, meaning who ultimately bears the cost of the tax.

Question 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:

Accepted Answer

This tax is progressive because the tax rate increases as the income increases, which is characteristic of a progressive tax system.

Question 19

Which of the following taxes is the most likely to be regressive?

Accepted Answer

Excise duties on kerosene are most likely to be regressive because they take a larger percentage of income from low-income groups than from high-income groups. Kerosene is often used by lower-income households for heating and cooking, making this tax more burdensome for them relative to their income.

Question 20

Impact of tax refers to:

Accepted Answer

The answer of Impact of tax refers to:
...

Quiz 1: Public Finance and Taxation Policy