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

Answer: (d)

Primary deficit is fiscal deficit minus interest payments. India started using this term in 1997- 98.

Primary deficit is considered a very useful tool in helping bring more transparency in the government’s pattern of expenditure. It shows the current state of government finances.

If interest payments are deducted from a fiscal deficit, then it will obviously show a lesser deficit for that year as the interest payments are on account of loans taken in the past and not in the present year

Answer: (b)

In economics, tax incidence is the analysis of the effect of a particular tax on the distribution of economic welfare. Tax incidence is said to "fall" upon the group that ultimately bears the burden of, or ultimately has to pay, the tax.

Answer: (b)

Corporation Tax is imposed by State as well as Central Government. Corporation tax is imposed on the income or capital of some types of legal entities. The taxes may also be referred to as income tax.

Answer: (a)

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

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)