public finance fiscal & monetary policy section 3 MCQ Questions & Answers Detailed Explanation

Answer: (c)

A sinking fund is a fund created by the government and gradually accumulated every year by setting aside a part of current public revenue in such a way that it would be sufficient to pay off the funded debt at the time of maturity.

Under this method, the aggregate burden of public debt is least felt, as the burden of taxing the people to repay the debt is spread evenly over the period of the accumulation of the fund. The preferable alternative for the government is to raise a new loan and credit the proceeds of the sinking fund. It is a separate fund established by a government.

Answer: (b)

Social infrastructure refers to the facilities and mechanisms that ensure education, health care, community development, income distribution, employment and social welfare.

It includes health care system, including hospitals, the financing of health care, including health insurance, the systems for regulation and testing of medications and medical procedures; the educational and research system, including elementary and secondary schools, universities, specialised colleges, research institutions; Social welfare systems; Sports and recreational infrastructure, such as parks, sports facilities, the system of sports leagues and associations; Cultural infrastructure; and business travel and tourism infrastructure, including both manmade and natural attractions, etc.

Answer: (a)

Fiscal policy is expressed by the budget

Answer: (a)

The Central Board of Direct Taxes (CBDT) panel on black money recently suggested the enactment of new laws, the strengthening of existing legislation and the introduction of deterrent penalties for tax offences to deal with the menace.

In its 66-page report on measures to tackle black money in India and abroad, the CBDT committee also recommended steps to prevent the generation of illicit funds through transactions in property, bullion and equity market.

Besides, the panel, headed by former CBDT Chairman Laxman Das, made a case for strengthening laws relating to investments by FIIs, Participatory Notes (PNs) and routing of funds from Mauritius.

Answer: (b)

In the case of direct taxes the burden or ‘incidence’ has to be borne by the taxpayers themselves whereas in the case of an indirect tax, the burden can be shifted to another person

Answer: (b)

The government of India imposes an income tax on taxable income of individuals, Hindu Undivided Families (HUFs), companies, firms, co-operative societies and trusts (identified as the body of individuals and association of persons) and any other artificial person.

Levy of tax is separate on each of the persons. The levy is governed by the Indian Income Tax Act, 1961. It does not lead to an increase in price as it is dependent on the income of individuals.