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

Answer: (c)

All taxes which are the personal liability of an assessee come under direct taxes.

They include income tax, professional tax, wealth tax, securities transaction tax, commodity transaction tax and the like.

On the other hand, the taxes which a person can recover from some other person but the liability of which remains of the person collecting such taxes are indirect taxes.

These are custom duty, excise, service tax, vat, CST and the like

Answer: (d)

Estate duty is a tax on assets left behind by a person upon his dealt, whereas inheritance tax is tax on assets inherited by a person. It started in 1953 in India and was abolished in 1985.

Answer: (b)

In economics, a transfer payment (or government transfer or simply transfer) is a redistribution of income in the market system. These payments are considered to be exhaustive because they do not directly absorb resources or create output.

Examples of certain transfer payments include welfare (financial aid), social security, and government making subsidies for certain businesses (firms). Government debt is the debt owed by a central government.

In the budget, it is listed among the transfer payments by the government.

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: (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: (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.