public finance fiscal & monetary policy section 5 MCQ Questions & Answers Detailed Explanation

Answer: (b)

Answer: (c)

Answer: (a)

Income tax, fringe tax, interest tax all are direct taxes paid directly to the government by the persons on whom it is imposed.

Answer: (c)

Benjamin Franklin’s utterance, “In this world, nothing can be said to be certain, except death and taxes,” when applied in economics means that the largest amount of revenue raised by governments comes from taxation.

The proverb draws on the actual inevitability of death to highlight the difficulty in avoiding the burden of taxes.

Answer: (a)

Privatization is the process of transferring ownership of a business, enterprise, agency, public service or public property from the public sector (a government) to the private sector, either to a business that operates for a profit or to a non-profit organization.

The term can also mean government outsourcing of services or functions to private firms, e.g. revenue collection, law enforcement, and prison management.

There are four main methods of privatization:

1. Share issue privatization (SIP) - selling shares on the stock market;
2. Asset sale privatization - selling an entire organization (or part of it) to a strategic investor, usually by auction or by using the Treuhand model;
3. Voucher privatization - distributing shares of ownership to all citizens, usually for free or at a very low price; and
4. Privatization from below - Start-up of new private businesses in formerly socialist countries.

Answer: (d)

An ad valorem tax (Latin for "according to value") is a tax based on the value of the real estate or personal property. It is more common than a specific tax, a tax based on the quantity of an item, such as cents per kilogram, regardless of price.

It is levied on the basis of the value given by producers. So sometimes, the primary difficulty with such taxation, especially in the case of tariffs, is in establishing a satisfactory value figure.