ECONOMICS QUESTIONS

PAPER – VI ( Sir Mapuia )

Multiple Choice Questions

2013
1. Which is the main point on the basis of which public finance can be distinguished
from private finance?
(a) Price policy
(b) Borrowing
(c) Secrecy
2. The main difference between public and private finance is
(a) balance of income-expenditure
(b) coercive to raise income
(c) dissaving
3. There are several chances of market failures in laissez-faire capitalism; and to
improve the efficiency of market and as its corrective measure
(a) government intervention is advocated
(b) private intervention is advocated
(c) monopoly power is advocated
4. Increase in public expenditure provides
(a) economic stability
(b) economic instability
(c) economic degradation
5. Public expenditure is not merely a financial mechanism but a means securing
(a) capital objectives
(b) social objectives
(c) socialism
6. Which one of the following is the objective of public debt?
(a) Development finance
(b) To overcome depression
(c) All of the above
7. A tax levied at 10% on the first Rs 10,000 of income, 15% on the next Rs 20,000 and
7% on the next Rs 30,000, would be
(a) progressive tax
(b) regressive tax
(c) proportional tax
8. Which one of the following is a characteristics of a tax?
(a) Optional
(b) Compulsory
(c) Forced
9. Which one of the following is the meaning of taxable capacity?
(a) Maximum limit/capacity to which the government can tax the people
(b) Minimum limit/ capacity to which the government can tax the people
(c) Moderate limit/ capacity to which the government can tax the people
10. The principle of sound finance in which small and balanced budget was advocated by
(a) J.M. Keynes
(b) A.P. Lerner
(c) Classical economists
2014
1. Market failure can occur when
(a) monopoly power exists in the market
(b) markets are missing
(c) moral hazard, and adverse selection exist
(d) All of the above
2. A good is considered to be non-rival in consumption, when
(a) two or more persons can consume the same good
(b) only one person consume it
(c) it is a non-consumable good
(d) None of the above
3. According to Wagner, the root cause of the increasing public expenditure in modern
times is
(a) Defence
(b) The pressure for social progress
(c) Democracy
(d) None of the above
4. The canon of sanction in public expenditure implies that
(a) Every government expenditure should be audited
(b) No audit is required for government expenditure
(c) Government expenditure should be reduced
(d) None of the above
5. A tax is ad valorem, when
(a) it is based on income
(b) it is based on the money value of goods
(c) it is based on the weight of the goods
(d) All of the above
6. Impact of a tax refers to
(a) the legal responsibility of a person
(b) the shifting possibility
(c) the final money burden of a tax
(d) None of the above
7. Which among the following is not a method of debt redemption?
(a) Sinking fund
(b) Refunding
(c) Deficit financing
(d) All of the above
8. Government resorted to borrowing, when
(a) current revenues fall short of public expenditure
(b) current revenues exceed public expenditure
(c) current revenues equal public expenditure
(d) None of the above
9. The First Finance Commission was appointed in the year
(a) 1950
(b) 1951
(c) 1952
(d) 1955
10. The economic classification of Central Budget consists of
(a) 6 accounts
(b) 7 accounts
(c) 8 accounts
(d) 10 accounts
2015
1. Which is the main point of difference between public and private finances?
(a) Borrowing
(b) Secrecy
(c) Price policy
(d) All of the above
2. Market failure occurs when
(a) monopoly power exists in the market
(b) markets are missing
(c) moral hazard and adverse selection exist
(d) All of the above
3. Public expenditure is a financial means to secure
(a) capital objectives
(b) social objectives
(c) socialism
(d) employment
4. Increase in public expenditure is not due to
(a) expansion of state activities
(b) population increase
(c) urbanization
(d) existence of black market
5. A tax is ad valorem when it is
(a) based on income
(b) based on money value
(c) based on the weight of good
(d) based on transport cost
6. MODVAT means
(a) modified value added tax
(b) modernized value added tax
(c) moderated value added tax
(d) mode of value added tax
7. A method of debt redemption includes
(a) sinking fund
(b) capital levy
(c) refunding
(d) All of the above
8. The main objective of taking public loan is to
(a) achieve social objective
(b) achieve personal objective
(c) achieve long-term objective
(d) achieve short-term objective
9. Functional classification of budget refers to
(a) economic services only
(b) social services only
(c) general services only
(d) A11 of the above
10. The First Finance Commission was appointed in
(a) 1951
(b) 1954
(c) 1956
(d) 1960
2016
1. Who defines public finance as „the study of the principles underlying the spending
and raising of funds by public authorities‟?
(a) Prof. Hugh Dalton
(b) Findlay Shiras
(c) Harold Groves
(d) J. M. Keynes
2. Focus of marketing activity is always on
(a) consumer‟s need
(b) producer‟s need
(c) government‟s need
(d) taxable need
3. Increase in public expenditure provides
(a) economic stability
(b) economic instability
(c) economic degradation
(d) None of the above
4. Development expenditure consists of expenditure on
(a) social services
(b) community services
(c) economic services
(d) All of the above
5. The process of transferring the tax is known as
(a) incidence of taxes
(b) tax burden
(c) tax shifting
(d) impact of taxes
6. If the rate of tax rises with rise in income, it is called
(a) a regressive tax
(b) a progressive tax
(c) a proportional tax
(d) All of the above
7. Which among the following is not a method of debt redemption?
(a) Sinking fund
(b) Capital levy
(c) Deficit financing
(d) All of the above
8. Government resort to the borrowing when
(a) current revenue falls short of public expenditure
(b) current revenue exceeds public expenditure
(c) current revenue equals public expenditure
(d) None of the above
9. The First Finance Commission was appointed in November, 1951 under the
chairmanship of
(a) Shri K. Santhanam
(b) Shri A.K. Chanda
(c) Shri K.C. Neogi
(d) Shri K.C. Pant
10. The budget is divided into two parts—the revenue budget and the
(a) expenditure budget
(b) financial budget
(c) receipts budget
(d) capital budget
2017
1. Who among the following advocates the principle of maximum social advantage?
(a) J. S. Mill
(b) Hugh Dalton
(c) Adam Smith
(d) None of them
2. Who defines, “Public finance is concerned with the income and expenditure of public
authorities and with the adjustment of the one to another.”?
(a) Prof. Hugh Dalton
(b) Findlay Shiraz
(c) Harold Groves
(d) J. M. Keynes
3. Public Expenditure is a financial means to secure
(a) capital objectives
(b) social objectives
(c) socialism
(d) employment
4. Which of the following items accounts for the highest expenditure in the Union
budget 2017-18?
(a) Defence
(b) Education
(c) Grants and loans to States
(d) Food subsidy
5. A tax is ad valorem, when it is based on the
(a) income
(b) weight of goods
(c) transport cost
(d) All of the above
6. Which of the following is direct tax?
(a) Sales tax
(b) Entertainment tax
(c) Income tax
(d) Luxury tax
7. Which of the following is not a method of debt redemption?
(a) Deficit financing
(b) Sinking fund
(c) Debt conversion
(d) None of the above
8. The effect of public debt in an inflationary situation is
(a) contractionary
(b) expansionary
(c) promotion of investment
(d) increasing consumption
9. Functional classification of budget refers to the
(a) economic services
(b) social services
(c) general services
(d) All of the above
10. The first Finance Commission was appointed in the year
(a) 1950
(b) 1951
(c) 1952
(d) 1955

Short Answer Questions

2013
1. Distinction between private goods and public goods.
2. Objectives of public expenditure.
3. Tax revenue and non-tax revenue.
4. Sources of public debt.
5. Finance Commission of India.
2014
1. Role of government in the economy.
2. Canons of public expenditure.
3. Ability to pay approaches to taxation.
4. Methods of debt redemption.
5. Different kinds of budget.
2015
1. Distinction between private goods and public goods.
2. Wagner‟s law of public expenditure.
3. Impact and incidence of taxes.
4. Ricardian equivalent theorem of public debt.
5. Characteristics of an ideal budget.
2016
1. Meaning of „principle of maximum social advantage‟.
2. Objectives of public expenditure.
3. Progressive tax.
4. Sources of public borrowing.
5. Zero-based budgeting.
2017
1. Distinction between private goods and public goods.
2. Meaning of public expenditure.
3. Distinction between proportional tax and regressive tax.
4. Sources of public debt.
5. Finance Commission of India.
Long Answer Questions
2013
1. Discuss the nature and scope of public finance.
Or
Explain the principle of maximum social advantage.
2. State the canons and principles of public expenditure.
Or
What factors are responsible for the growth of public expenditure in recent years?
3. What are the characteristics of a good tax system?
Or
Define tax. Distinguish among impact, shifting and incidence of taxes.
4. What is public debt? What are the different types of public debt?
Or
Explain the various methods adopted for redemption of public debt.
5. Define budget. Explain the economic and functional classifications of budget.
Or
How is a budget prepared and passed in India?
2014
1. Define public finance and distinguish between public finance and private finance.
Or
What is market failure? What are the factors that lead to market failure?
2. What is public expenditure? Examine the effects of public expenditure on production,
distribution and consumption.
Or
Discuss the causes for the growth of public expenditure in recent year.
3. What is taxable capacity? Distinguish between absolute and relative taxable capacity.
Or
Define direct taxes and indirect taxes. What are various characteristics of a good tax
system?
4. Discuss the role of public debt in a developing country like India.
Or
What are various methods of raising public debt by the government?
5. What is a public budget? Distinguish between economic and functional classification
of budget.
Or
Examine the main functions of finance commission of India.
2015
1. Define public finance. Distinguish between public finance and private finance.
Or
Explain the principle of maximum social advantage.
2. What is public expenditure? Examine the effects of public expenditure on production
and distribution.
Or
State the canons and principles of public expenditure.
3. Define tax. What are the characteristics of a good tax system?
Or
What is taxable capacity? Mention the factors determining taxable capacity.
4. Explain various sources of public borrowing by the government.
Or
Explain various effects of public debt.
5. How is a budget prepared and passed in India?
Or
Examine the main functions of Finance Commission of India.
2016
1. What is public finance? Explain the growing importance of public finance in modern
times.
Or
Discuss the factors that lead to market failure and measure to correct market failure.
2. What are the canons of public expenditure?
Or
Discuss the role of development expenditure in a developing economy.
3. What is public revenue? Give various sources of public revenue.
Or
Discuss the main characteristics of a good tax system.
4. What is public debt? Distinguish between public debt and private debt.
Or
What is debt redemption? Explain various methods adopted by a government to
redeem public debt.
5. Explain the economic and functional classifications of budget.
Or
Write notes on the following:
(a) Revenue and Capital Budget.
(b) Union and State Budgets.
2017
1. Define public finance. Distinguish between public finance and private finance.
Or
Explain the principle of maximum social advantage.
2. Discuss the causes for the growth of public expenditure in recent years.
Or
State the cannons and principles of public expenditure.
3. Distinguish between direct taxes and indirect taxes. What are the main characteristics
of a good tax system?
Or
Discuss the ability-to-pay approach of taxation.
4. Explain various sources of public borrowing by the Government.
Or
What is debt redemption? Explain various methods adopted by a government to
redeem public debt.
5. Define budget. How is a budget prepared and passed in India?
Or
Explain the economic and functional classification of a budget.