Public Economics MCQs Quiz Multiple Choice Questions & Answers

1. The equity principle of taxation was propounded by

1. Adam Smith
2. Dalton
3. J.B Say
4. Marshall

2. The existence of economic inequalities among the states is known as

1. Vertical imbalance
2. Horizontal Imbalance
3. parallel imbalance
4. none of these

3. The final resting place of the burden of tax is called

1. Tax avoidance
2. Tax evasion
3. Impact
4. Incidence

4. The Finance Commission does all the following functions except one, which is that?

1. Works out allocation of taxes in the divisible pool
2. Looks into financial relations between the Centre and the States
3. Allocates grants -in-aid to the States and Union Territories
4. Assist the Planning Commission in making 5 year plans.

5. The Finance Commission in India is appointed by

1. President
2. Prime Minister
3. Chief Minister
4. Finance Minister

6. The finance commission is appointed every

1. 3 years
2. 5 years
3. 6 years
4. 7 years

7. The financial year in India starts from

1. 1st January
2. 31st March
3. 1st April
4. 1st July

8. The First Finance Commission was appointed in the year

1. 1949
2. 1950
3. 1951
4. 1952

9. The first state to introduce VAT was

1. Bihar
2. Orissa
3. Haryana
4. Kerala

10. The FRBM Act was passed in

1. 1991
2. 2001
3. 2003
4. 2011

11. The government which taxes the least is the best, is the belief of

1. Mercantilists
2. Physiocrates
3. Modern
4. Classical

12. The Great Depression occurred during

1. 1919-23
2. 1929-33
3. 1949-53
4. 1901-05

13. The idea of ..Democratic Decentralization in India was popularized by

1. A.D. Gorwala Committee, 1951
2. B.R. Mehta Committee, 1957
3. Ashok Mehta Committee, 1978
4. None of these

14. The ideal system of public Finance is one where the net benefit is

1. Maximum
2. Minimum
3. Zero
4. Infinity

15. The income of the government through all its sources is called

1. Public expenditure
2. public revenue
3. Public finance
4. none of these

16. The Indian income tax is

1. Direct and proportional
2. Indirect and proportional
3. Indirect and progressive
4. Direct and progressive

17. The Indian tax system is

1. Proportional
2. Progressive
3. Regressive
4. Degressive

18. The item or economic activity on which tax is imposed is known as

1. Tax buoyancy
2. tax rate
3. Excess burden
4. tax base

19. The Kelkar Proposals are concerned with

1. Recommendations for reforms in the power sector
2. Recommendations for tax reforms
3. Guidelines for the privatization of public sector undertakings
4. None of the above

20. The Kerala Panchayat Raj Act was passed in the legislature in the year

1. 1995
2. 1994
3. 2000
4. 1999

21. The largest component of revenue expenditure in India is

1. Pension
2. Interest payments
3. Education
4. Health

22. The largest component of revenue expenditure in India is

1. Pension
2. Interest payments
3. Education
4. Health

23. The main objective of budgeting is

1. Planning
2. Co-ordination
3. Control
4. All of these

24. The main objective of taking private loan is

1. To achieve public objectives
2. to achieve personal objectives
3. to achieve long term objectives
4. none of these

25. The maximum effect of direct taxes is on

1. Price of food
2. Income
3. Capital goods
4. consumer goods

26. The methods of restoring resource balance between different governments in a federal set-up is based on

1. Tax sharing
2. Grants-in-Aid
3. Loans
4. All the above

27. The modern state is

1. Laissez-faire state
2. Welfare state
3. Aristocratic state
4. Police state

28. The modern theory of tax incidence was developed by

1. Dalton
2. Keynes
3. R A Musgrave
4. none of these

29. The most accepted theory of taxation in modern times

1. Benefit theory
2. Cost of service
3. Financial Theory
4. Ability theory

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

1. Concentration effect
2. inspection effect
3. Displacement effect
4. none of these

31. The neo-Keynesian approach to public finance is called

1. Functional finance
2. Aggregate demand
3. Global finance
4. Federal finance

32. The principle of Maximum Social Advantage have been suggested by

1. Pigou
2. Dalton
3. Musgrave
4. Adam Smith

33. The revenue of the State Government is raised from the following sources except one, which is that?

1. Land revenue
2. agricultural income tax
3. Entertainment tax
4. expenditure tax

34. The Theory of Maximum Social Advantage was given by

1. Marshal
2. Dalton
3. Musgrave
4. Mill

35. The VAT was first introduced in

1. India
2. Britain
3. USA
4. France

36. The VAT was first introduced in the year

1. 2003
2. 2004
3. 2005
4. 2006

37. The Wanchoo Committee (1971) probed into

1. Direct taxes
2. indirect taxes
3. Agricultural holding tax
4. non-tax revenue

38. The Zero-based budgeting was first adopted in

1. India
2. France
3. Germany
4. USA

39. 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

1. Herbert Simon
2. Arthur Laffer
3. Robert Lucas
4. J.B. Say

40. Those goods whose consumption and use are to be encouraged are called

1. Private good
2. Public good
3. merit good
4. mixed good

41. Treasury bills issued by the Government are in the nature of

1. Funded debts
2. Floating debts
3. Irredeemable debts
4. None

42. Unemployment insurance is an example of

1. Built in flexibility
2. Formula Flexibility
3. Discretionary Action
4. none of these

43. Unfunded debts are also known as

1. Funded debts
2. Floating debts
3. Irredeemable debts
4. None

44. Wagners Law is related to

1. Public revenue
2. Public expenditure
3. Public debt
4. Budget

45. When Ed is greater than Es, more incidence is on

1. Buyers
2. Sellers
3. Govt.
4. none of these

46. When Ed=Es, the burden is divided between

1. Buyers
2. Sellers
3. both a & b
4. Govt.

47. When Ed=infinity or Es=0, the whole incidence is on

1. Buyers
2. Sellers
3. Govt.
4. none of these

48. When Es=infinity or Ed=0, the whole incidence is on

1. Buyers
2. Sellers
3. Govt.
4. none of these

49. When Esis greater than Ed, more incidence is on

1. Buyers
2. Sellers
3. Govt.
4. none of these

50. When expenditure exceeds total tax revenue, it is called

1. Surplus budget
2. Balanced budget
3. Deficit budget
4. None of these