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

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: (d)

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)

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.