Public Finance MCQs by Geek

1. Taxes are levied to:

A.Penalise people B.Provide direct benefits to tax payers
C.Provide general benefits for the people D.To accumulate funds

Answer: Option C

2. Whom of the following propounded principles of taxation:

A.Keynes B.Marshall
C.Adam Smith D.Al Ghazali

Answer: Option C

3. Taxes on commodities are:

A.Direct taxes B.Indirect taxes
C.Progressive taxes D.Proportional taxes

Answer: Option B

4. Govt. prepares its budget:

A
Weekly B.Monthly
.
C.Quarterly D.Annually

Answer: Option D

5. One of the following is NOT a feature of private finance:

A.Balancing of income and expenditure B.Secrecy
C.Saving some part of income D.Publicity

Answer: Option D

6. One of the following is NOT a feature of private finance:

A
Publicity B.Secrecy
.
C.Efforts to balance income and expenditure D.Taking steps to increase income

Answer: Option B

7. It is direct tax:
A
Excise tax B.Sales tax
.
C.Income tax D.Custom duty

Answer: Option C
8. These are heads of expenditure of the government EXCEPT?
A
Provide social services B.Defence
.
C.Improve transport and communication D.Provide cosmetics

Answer: Option D

9. The most important source of income of a government is:

A
Foreign loans B.Taxes
.
C.Printing of new money D.Sale of government property

Answer: Option B

10. Progressive taxes:

A
Increase government revenue B.Bring equality in distribution of incomes
.
C.Act as penalty for rich people D.Both (a) & (b)
Answer & Explanation

Answer: Option D

11. These are principles of taxation:

A
Principle of equality B.Principle of certainty
.
C.Principle of secrecy D.Both (a) & (b)

Answer: Option D

12. In Pakistan, taxes are levied by:

A.Prime minister of Pakistan B.President of Pakistan
C.Federal cabinet of ministers D.National assembly

Answer: Option D

13. Which of the following tax is best example of ability to pay principle of taxes:

A.Excise tax on cigarettes B.Highway toll tax

C.Proportional sales tax D.Personal income tax

Answer: Option D

14. Govt. taxing and spending policies are called:

A.Monetary policy B.Fiscal policy
C.Commercial policy D.Finance policy

Answer: Option B

15. Govt. budget is balanced when:

A.Govt. expenditure outstrips tax receipts B.Govt. tax receipts outstrips expenditure
C.Government expenditure equals tax revenue D.None of the above

Answer: Option C

16. Government finance is called:

A.National finance B.Public finance
C.Private finance D.(a) and (b) of above

Answer: Option B

17. How the government can meet its expenditure:

A.By taxing people B.By borrowing from banks and other governments
C.By printing new money D.By all the three methods

Answer: Option D

18. The government can collect funds from:

A.Taxes B.Fees
C.Prices of public goods D.All the three

Answer: Option D

19. A direct tax is that which:

A.Is heavy burden on the tax payers B.Can be directly deposited in the banks
C.Can not be evaded D.Is paid by the person on whom it is levied

Answer: Option D

20. In Pakistan government budget is prepared by:

A.National Assembly B.President of Pakistan

C.Ministry of Finance D.State Bank of Pakistan

Answer: Option C

21. In Pakistan Income tax is:

A.Progressive tax B.Proportional
C.Direct D.(a) and (b) of above

Answer: Option D

22. Which tax better conforms to the principle of equality in taxation

A.Progressive tax B.Regressive tax
C.Proportional tax D.Fixed tax

Answer: Option A

23. Which one is not a principle of taxation:

A.Principle of equality B.Principle of certainty
C.Principle of morality D.Principle of diversity

Answer: Option C

24. A country has proportional system of taxation. A person pays Rs 500 tax when his income is
5000, how much tax he will pay if his earning rises to 8000:
A.200 B.400
C.600 D.800

Answer: Option D

25. Which source a private company cannot use?

A.A bank loan B.A bank overdraft
C.Selling new shares in stock exchange D.Deficit finance (new money)

Answer: Option D

26. Net taxes are:

A.Domestic taxes minus foreign taxes B.Business taxes minus personal taxes
C.Total taxes minus govt. transfer payments D.Total taxes minus govt. purchases

Answer: Option C

27. Which is not counted as public expenditure?

A.Subsidy given to local city bus service B.Defence expenditure
C.Investment spending by public companies D.Interest payment on national debt.

Answer: Option C

28. If Income tax is assessed as Rs. 100 on an income of Rs. 1000. Compared to this, which one of the
following indictes that the income tax rate is progressive?
A.Rs. 150 tax on Rs. 2000 income B.Rs. 350 tax on Rs. 3000 income
C.Rs. 400 tax on Rs. 4000 income D.Rs. 450 tax on Rs. 5000 income

Answer: Option B

29. The most important source of income of a government is:

A.Foreign loans B.Sprinting of new money
C.Sale of government property D.Taxes

Answer: Option D

30. Progressive taxes:

A.Increase government revenue B.Bring equality in distribution of incomes
C.Compel rich people to be honest D.(a) & (b) of above

Answer: Option D

31. This is NOT a principle of taxation:

A.Principle of equality B.Principle of certainty
C.Principle of secrecy D.Principle of economy

Answer: Option C

32. This is principle of taxation

A.Principle of honesty B.Principle of morality
C.Principle of secrecy D.Principle of economy

Answer: Option D

33. In Pakistan, the authority to levy taxes lies with:

A.Prime minister of Pakistan B.President of Pakistan
C.Federal cabinet of ministers D.National assembly
Answer: Option D
34. This tax is a good example of ability to pay principle of taxes:
A.Excise tax on cigarettes B.Highway toll tax
C.Proportional sales tax D.Personal income tax

Answer: Option D

35. Govt. taxing and spending policies are called:

A.Monetary policy B.Fiscal policy
C.Commercial policy D.Finance policy

Answer: Option B

36. Govt. budget is balanced when:

A.Govt. expenditure is kept to the minimum B.Govt. income consists of both tax and non-tax income
C.Government expenditure equals tax revenue D.None of the above

Answer: Option C

37. Government finance is called:

A.National finance B.Public finance
C.Official finance D.(a) & (b) of above
Answer & Explanation

Answer: Option B

38. The government can meet its expenditure:

A.By taxing people B.By printing new money
C.By borrowing from banks and foreign countries D. By all the three methods
Answer: Option D

39. It is direct tax:

A.Property tax B.Income tax
C.Import tax D.All are indirect taxes

Answer: Option C

40. Mansoor Software Co imported computers and paid import tax. Burden of tax will be on:
C.Last buyer D.Retailer

Answer: Option C

41. If a person who is tax-payer can shift the burden of tax to someone else, the tax is called:
A.Movable tax B.Indirect tax
C.Transfer tax D.Undesirable tax
Answer: Option B
42. The federal budget of Pakistan includes:
A.Direct taxes and indirect taxes B.Proportional and progressive taxes
C.Simple and difficult taxes D.(a) & (b) of above
Answer & Explanation

Answer: Option D

43. To bring equitable distribution of income in the country taxes should be

A.Direct B.Indirect
C.Proportional D.Progressive

Answer: Option D

44. These are principles of taxation:

A.Equality and certainty B.Certainty and morality
C.Flexibility and durability D.Durability and rigidity
Answer & Explanation

Answer: Option A

45. It is better way to finance the govt. budget:

A.By taxing people B.By printing new money
C.By borrowing from banks D.By fining people doing illegal activities

Answer: Option A

46. Income tax in Pakistan is:

A.Direct and progressive B.Direct and proportional
C.Indirect and progressive D.Indirect and proportional

Answer: Option A

47. In Pakistan, income tax is collected by:

A.Local govt. B.Provincial govt.
C.Federal govt. D.All governments

Answer: Option C

48. Sales tax in Pakistan is:

A.Direct and progressive B.Direct and proportional
C.Indirect and progressive D.Indirect and proportional

Answer: Option D

49. It is easy and convenient to pay:

A.Direct tax B.Indirect tax
C.Proportional tax D.Progressive tax

Answer: Option B

50. It is difficult to evade:

A.Direct tax B.Indirect
C.Proportional D.Progressive tax

Answer: Option A

51. Zakat is not due on the gold owned by a person who has less than:
A.60 tolas B.30 tolas
C.15 tolas D.7.5 tolas
Answer & Explanation

Answer: Option D

52. Zakat can be spent for this purpose:

A.Payment of fee of a poor child B.Performing Hajj
C.Help poor parents D.All of the above

Answer: Option A

53. It is a source of revenue for the Local overnment bodies:

A.Corporation tax B.Value added tax
C.Excise tax D.Property tax

Answer: Option D

54. Federal government transfers to provinces as their share in tax collection:

A.Less than 40% B.More than 40% but less than 60%
C.More than 60% D.More than 90%

Answer: Option B

55. Which tax is not shared between central and provincial governments?
A.Excise tax B.Sales tax
C.Custom duty D.Property tax

Answer: Option D

Explanation:

56. Which is provincial tax in Pakistan:

A.Excise tax B.Sales tax
C.Import duty D.Motors token tax

Answer: Option D

57. Tax is a payment:

A.Compulsory B.Voluntary
C.Unnecessary D.Temporary

Answer: Option A

58. The main source of revenue of federal government is:

A.Property taxes B.Token tax
C.Custom duties D.Sales tax

Answer: Option D

59. In Pakistan government budget is prepared by:

A.National assembly B.President of Pakistan
C.Ministry of Finance D.State Bank of Pakistan

Answer: Option C

60. In Pakistan Income tax is:

A.Progressive tax B.Proportional
C.Direct D.(a) and (c) of above

Answer: Option D

61. The budget estimate prepared by ministry of finance is finally approved by:
A.State Bank B.President
C.Senate D.National Assembly

62. Federal govt. budget estimate for 2010-11 is:

A.2800 million B.2800 billion
C.2800 trillion D.Bigger than 2800 trillion

Answer: Option B

63. Government of Pakistan can increase its resources by:

A.Taxing people B.Printing new notes
C.Borrowing D.All the three
Answer: Option D

64. The non-Muslims pay Zakat:

A.At a higher rate than Muslims B.At a lower rate than Muslims
C.At the same rate D.Do not pay Zakat

Answer: Option D

65. To control inflation the government should increase:

A.Budget deficit B.Consumer spending
C.Income tax D.Pensions

Answer: Option C

66. In past decades Pakistan increased its GDP, yet living standard of majority has not risen. The
most important cause of this situation is:
A.Increased govt. expenditure B.Increased imports
C.Increased education D.Increased population
Answer: Option D

67. Which of the following should NOT be the aim of a government:

A.Economic growth B.Full employment
C.Inequality of incomes D.Price stability

Answer: Option C

68. Which of the following would cause incomes to become more unequal:
A.Increased employment B.Increased unemployment allowance
C.More progressive taxes D.More regressive taxes

Answer: Option D

69. What is the benefit of tariffs:

A.Increased choice B.Increased government revenue
C.More competition D.More trade

Answer: Option B

70. Pakistan's public debt is:

A.Larger than GNP B.Approximately equal to GNP
C.Smaller than GNP D.Smaller than our exports

Answer: Option C

71. Pakistan's fiscal year starts from:

A.1st September B.1st January
C.1st April D.1st July

Answer: Option D
72. The Federal budget is presented in the parliament by:
A.Prime minister B.President
C.Finance minister D.Commerce minister

Answer: Option C

73. Pakistan's Budget has parts:

A.Current and development B.Revenue and expenditure
C.Development and non-development D.Both (a) and (b)

Answer: Option D

74. Federal government tax revenue collection includes:

A.Divisible taxes with provinces B.Divisible taxes with district govt.
C.Non-tax revenue D.All of the above

Answer: Option A

75. Which is true:

A.Federal govt. collects taxes and shares with provinces B.Provincial govt. collects taxes and shares
with federal govt.
C.Federal govt. collects taxes and shares with local govts. D.Local govts. Collects, taxes and shares
with federal govt.

Answer: Option A

76. Which is true?

A.Federal govt. has the right to collect taxes B.Provincial govt. has the right to collect taxes
C.Local govt. has the right to collect taxes D.All of the above is true

Answer: Option D

77. The most important body to collect taxes in Pakistan is:

A.District govts. B.State Bank
C.Ministry of finance D.FBR

Answer: Option D

78. According to total amount collected the taxes fall in this order:
A.Custom, excise, sales B.Sales, custom, excise
C.Custom, sales, excise D.Excise, sales, custom

Answer: Option B

79. According to total amount collected the taxes fall in this order:
A.Custom, sales tax, income tax B.Custom, income tax, sales tax
C.Income tax, custom, sales tax D.Sales tax, custom, excise

Answer: Option D
80. Which is true about amount of taxes collected in Pakistan:
A.Direct taxes are more than indirect taxes B.Indirect taxes are more than direct taxes
C.Provincial taxes are more than federal D.Provincial govts. Share taxes with federal govt.

Answer: Option B

81. Exemption limit for income tax in Pakistan is:

A.10 lakh B.5 lakh
C.3 lakh D.1 lakh

Answer: Option C

82. Rate of General Sales Tax (GST) is:

A.Less than 10% B.More than 10% but less than 20%
C.More than 20% but less than 30% D.More than 30% but less than 40%

Answer: Option B

83. 40% of income of federal government is obtained from:

A.Income tax B.Excise tax
C.Import tax D.Property tax

Answer: Option A

84. Pakistan's expenditure on defence is:

A.10% of federal budget B.More than 10% but less than 25%
C.More than 25% but less than 35% D.More than 35% but less than 45%

Answer: Option B