public finance fiscal & monetary policy section 1 MCQ Questions & Answers Detailed Explanation

Answer: (d)

In economics, economic equilibrium is a state of the world where economic forces are balanced and in the absence of external influences, the (equilibrium) values of economic variables will not change.

The condition of equilibrium of income is the equality of intended saving and intended investment. An economy is in equilibrium when total savings equal total investment.

Answer: (c)

Service tax was introduced in 1994-95 to address the asymmetric and distortionary treatment of goods and services in tax framework and to widen the tax net

Answer: (b)

1. Fiscal deficit is excess of total expenditure over total receipts less borrowing.
2. Budget deficit is excess of total expenditure over total receipts.
3. Revenue deficit is excess of revenue expenditure over revenue receipts.
4. Primary deficit is excess of total expenditure over total receipts less borrowings and interest payments.

Answer: (a)

There are two types of budgets

i.e., Revenue budget and Capital budget. The revenue budget contains all current receipts, such as taxation, (central excise, customs duty, corporation tax) dividends of public sector units (PSU’s) and expenditure of the government.

The capital budget consists of all capital receipts and expenditures such as domestic and foreign loans, loan repayment, foreign and etc.

Answer: (b)

Excise tax, custom duty and service tax are all indirect taxes while property tax and income tax are direct taxes.

Answer: (a)

The Department of Economic Affairs (DEA) under Ministry of Finance is the nodal agency of the Union Government to formulate and monitor country’s economic policies and programmes having a bearing on domestic and international aspects of economic management.