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Public Expenditure-MCQ |
Q Choose appropriate
answers
1. Transfer payments include-
a) Old age pension b) Subsidies
c) Interest on public debt d) all of the above
2. Interest payments are a part of –
a) Development Expenditure b) Non-Development Expenditure
c) Capital Expenditure d) All of the above
3. Bharat Nirman, MGNREGA
are examples of -
a)
Plan Expenditure b)
Non-Plan Expenditure
c) Capital
Expenditure d) None of the above
4. Which of the following is not true of public budget?
a) A
budget contains only proposals of taxation.
b) It
refers to the policies of the government.
c) It
contains the estimated receipts and proposed expenditure.
d) It
reflects the programmes of the government.
5. The number of sections of a good budget are –
a) Two b) Three
c) Five d) Eight
6. The budget presented when elections are due is known as –
a) Tentative Budget b) Proposed Budget
c) Zero Budgets d) Lame Duck Budget
7. Pick out the feature which is not applicable to a good budget,
a)
Comprehensiveness b) Clarity
c) Objectivity d) Lengthy
8. The finance commission's role is to -
a) Propose
New Taxes
b) To
Abolish Old taxes
c) To
review and modify arrangements
d) None
of the above
9. Pick out the item which is not a part of the plan expenditure,
a) Agriculture
b) Industry
c) Social Services d) Defense
10. Pick out the item which is not a part of capital budget.
a) Market Borrowings b) Sale of Treasury Bulls
c) Revenue from Industry d) Net Small Savings
11. Pick out the factor which is not a part of revenue budget.
a) Current
consumption expenditure on commodities.
b) Current
consumption expenditure on services
c) Transfer
payments
d) Expenditure
on machinery
12. Pick out the item which is not a part of non-tax revenue,
a) Interest Receipts b) Dividends
c) Customs d) Profits
13. Pick out the item which is not a part of tax revenue.
a) Interest b) Corporate Tax c) Excise d)
Customs
14. Pick out the item which is not a part of non-plan expenditure on
the revenue side.
|
a) Defense |
b) Central Assistance to states |
|
c) Subsidies |
d) None of the above |
15. Debts which have
to be paid at some specific future date are known as
|
a) Redeemable Debts |
b) Irredeemable Debts |
|
c) Treasury |
d) None of the above |
16. Loans taken by the government for purpose of
war, earthquakes for covering budget deficit are -
a) Productive Debts b) Unproductive
c) Voluntary Debts d) None of the above
17. Which of the following is not an objective of public debt
management.
a)
Loans at low cost
b) Repayment
over a long period
c) Stabilization
of the level of economic activity
d) Economic
growth
18. Which is / are the advantages of redemption of debt.
a) Saves
the government from bankruptcy
b) Reduces
Cost
c) Saves
future generation from the pressure of public debt
d) All
of the above
19. Pick out the feature which is not true in the case of
repudiation of debt.
a) Simplest
method of liquidating a debt.
b) It
will increase the credibility of the government.
c) Debtors
may face loss.
d) It
is discriminating
20. Pick out the method which is not a part of redemption,
a) Sinking Fund b) Surplus Budget c) Terminal
Annuities d) Refunding
21. The method by which a certain portion matures
every year as decided by the lottery system.
a) Sinking Fund b) Surplus Revenues c)
Terminal Annuities d) None of the above
22. Pick out the feature which is not true of a capital levy.
a) For
paying off unproductive debt.
b) It
is paid by those who earn huge profits.
c) It
does not follow the principle of equity.
d) It
helps to fight inflation.
23. Which of the following is the most comprehensive measure of
budgetary imbalances?
a)
Fiscal Deficit b)
Revenue Deficit
c)
Primary Deficit d) All of the above
24. The full form of FRBM Act 2003 is-
1. Fiscal
Regulation and Budget Management Act, 2003.
2. Fiscal
Regulation and Banking Management Act, 2003.
3. Fiscal
Responsibility and Budget Management Act, 2003.
4. Financial
Responsibility and Budget Management Act, 2003.
25. When budget revenue equals expenditure the
budget shows –
a) Balance
b)
Deficit
c) Surplus d) None of the above
26. The term fiscal federalism was introduced by -
a) Dalton b) Seligman
c) Musgrave d) None of the above
27. The theory of fiscal federalism assumes -
1. A
federal system of government can be efficient and effective in solving
problems.
2. A federal government will be able to bring
about economic stability allocation of resources.
3. Since
states and localities are not equal in their income, federalism is helpful.
4. All
of the above
[ Ans.:
(1 - d), (2 - b), (3 - a), (4 - a), (5 - b), (6 - d), (7 - d), (8 - c), (9 -
d), (10 - c), (11 - d), (12 - c), (13 - a), (14 - b), (15 - a), (16 - b), (17 -
b), (18 - d), (19 - b), (20 - d), (21 - c), (22 - c), (23 - a), (24 - c), (25 -
a), (26 - c), (27 - d)]
Multiple Choice Questions & Answers
Correct answer
indicated by ⇒
1. Positive economics
(a) does not depend on
market interactions.
(b) only looks at the
best parts of the economy.
(c) ⇒examines how the economy actually works (as opposed to how it
should work).
(d) is very
subjective.
2. The Coase theorem
has problems because
(a) ⇒generally, bargaining costs are not zero.
(b) individuals are not
concerned with others.
(c) markets always
exist.
(d) all of the above.
3. The marginal rate
of substitution is
(a) the slope of the
Pareto curve.
(b) the slope of the
contract curve.
(c) the slope of the
utility possibilities curve.
(d) ⇒the slope of the indifference curve.
4. The slope of the
production possibilities curve is the
(a) marginal rate of
substitution.
(b) contract curve.
(c) ⇒marginal rate of transformation.
(d) offer curve.
(e) Engel curve.
5. The First
Fundamental Theorem of Welfare Economics requires
(a) producers and
consumers to be price takers.
(b) that there be an
efficient market for every commodity.
(c) that the economy
operate at some point on the utility possibility curve.
(d) ⇒all of the above.
6. The economic
incidence of a unit tax is
(a) generally borne by
the buyers.
(b) generally borne by
sellers.
(c) generally borne by
the government.
(d) ⇒independent of the statutory incidence for the tax.
(e) none of the above
7. Market failure can
occur when
(a) monopoly power exists
in the market.
(b) markets are
missing.
(c) consumers can
influence prices.
(d) moral hazard and
adverse selection exist
(e) ⇒all of the above.
8. A public good is
(a) a good that the
public must pay for.
(b) ⇒nonrival in consumption.
(c) more costly than a
private good.
(d) paid for by the
government.
9. Movement from an
inefficient allocation to an efficient allocation in the Edgeworth Box will
(a) increase the
utility of all individuals.
(b) ⇒increase the utility of at least one individual, but may
decrease the level of utility of another person.
(c) increase the
utility of one individual, but cannot decrease the utility of any individual.
(d) decrease the
utility of all individuals.
10. Points on the
utility possibility frontier are
(a) inefficient.
(b) points of
incomplete preferences.
(c) not producible.
(d) ⇒Pareto efficient.
11. The economic
theory of optimal health care provision says that
(a) It is socially
optimal for free medical treatment to be provided to everyone
(b) Everyone should
pay their own medical expenses because they will set marginal cost equal to
marginal benefit.
(c) Adverse selection
can prevent efficient insurance markets from developing even when everyone buys
the same insurance.
(d) ⇒The optimal health care system will ration care: Some people who
would benefit from treatment should be denied that treatment.
(e) Moral hazard is
not a problem because nobody would intentionally do something that might make
them sick.
12. Market mechanisms
are unlikely to provide
(a) prices.
(b) ⇒non-rival goods efficiently.
(c) supply and demand.
(d) none of the above.
13. Public goods can
be
(a) provided
privately.
(b) provided publicly.
(c) subject to free
rider problems.
(d) ⇒all of the above.
14. Externalities can
be positive because
(a) marginal damages
do not last over time.
(b) ⇒utility can be impacted positively as well as negatively.
(c) there is no
concept for marginal benefit.
(d) positive
externalities are subsidies.
15. A Pigouvian
subsidy
(a) cannot exist with
externalities.
(b) is the same thing
as a Pigouvian tax.
(c) is measured in
terms of Pigouvian dollars.
(d) ⇒moves production to the socially optimal level of output
16. Which method can
help in obtaining a welfare improvement if externalites exist?
(a) Pigouvian taxes
(b) regulation
(c) assigning property
rights and permitting bargaining
(d) ⇒all of the above
17. Marginal damages
(a) ⇒must always be considered in social marginal costs.
(b) must not be
considered in social marginal costs.
(c) must sometimes be
considered in social marginal costs.
(d) have nothing to do
with social marginal costs.
18. In a public goods
context, it is difficult to measure impact on real income because
(a) public goods are
generally free to the public.
(b) they make up a
small percentage of total GDP.
(c) ⇒it is hard to measure how people value the public good.
(d) inflation
decreases the value of the good.
19. A fully funded
Social Security plan requires
(a) negative
generational accounts
(b) no taxes since
current workers pay for current retirees.
(c) future generations
to pay for the benefits of current retirees
(d) ⇒retirees to be paid from investments that have accumulated with
interest over their working lives.
(e) all of the above.
20. Social insurance
can be justified on the grounds of
(a) adverse selection.
(b) decision-making
costs.
(c) income
distribution.
(d) paternalism.
(e) ⇒all of the above.
21. Statutory
incidence of a tax deals with
(a) the amount of
revenue left over after taxes.
(b) the amount of taxes
paid after accounting for inflation.
(c) ⇒the person(s) legally responsible for paying the tax.
(d) the amount of tax
revenue generated after a tax is imposed.
(e) none of the above.
22. An ad valorem tax
is
(a) ⇒given as a proportion of the price.
(b) Latin for “buyer
beware.”
(c) identical to a
unit tax.
(d) computed using the
“inverse taxation rule.”
23. Lump sum taxes
(a) create no excess
burden.
(b) are not as widely
used as other forms of taxation.
(c) generally lack a
sense of equity.
(d) ⇒all of the above.
(e) none of the above.
24. If the proceeds
from a Pigouvian tax are used to income tax rates, then
efficiency in both
markets.
(a) increase;
increases
(b) reduce; reduces
(c) increase; reduces
(d) ⇒reduce; increases
(e) none of the above
25. “For goods that
are unrelated in consumption, efficiency requires that tax rates be inversely
proportional to elasticities.” This is the definition of
(a) the
benefits-received principle.
(b) ⇒the Ramsey Rule.
(c) the second best
principle.
(d) the inverse
elasticity rule.
(e)
horizontal equity
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