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

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: (a)

Corporation Tax, Wealth Tax and Income Tax are in the category of direct tax.

Answer: (d)

Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies.

The basic idea of the mixed economy is that the means of production are mainly under private ownership; that markets remain the dominant form of economic coordination; and that the government wields indirect influence over the economy through fiscal and monetary policies.

Answer: (a)

Answer: (c)

Revenue budget contains information about taxation such as central excise, custom duty, corporation tax etc

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.