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

Answer: (a)

Answer: (a)

Answer: (d)

In economics, fiscal policy is the use of government revenue collection (taxation) and expenditure (spending) to influence the economy.

The two main instruments of fiscal policy are government taxation and expenditure. Deficit financing is defined as financing the budgetary deficit through public loans and the creation of new money.

Deficit financing in India means the expenditure in excess of current revenue and public borrowing.

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: (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: (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