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

Answer: (a)

Deficit financing refers to the difference between expenditure and receipts. In public finance, it means the govt. is spending more than what it is earning.

Deficit financing is a necessary evil in a welfare state as the states often fail to generate tax revenue that is sufficient enough to take care of the expenditure of the state.

The basic intention behind deficit financing is to provide the necessary impetus to economic growth by artificial means.

Answer: (d)

Gold is mainly related to the international market as of all the precious metals, it is the most popular as an investment.

Gold has been used throughout history as money and has been a relative standard for currency equivalents specific to economic regions or countries, until recent times.

The gold price has shown a long term correlation with the price of crude oil.

Answer: (a)

Overdrafts are an extension of credit from a lending institution when an account reaches zero.

An overdraft allows the individual to continue withdrawing money even if the account has no funds in it. Basically, the bank allows people to borrow a set amount of money.

An overdraft occurs when money is withdrawn from a bank account and the available balance goes below zero. In this situation, the account is said to be “overdrawn.”

Answer: (d)

Annual financial statement gives various information for the current, last and next year

Answer: (b)

Answer: (c)

A turnover tax is similar to a sales tax or a VAT, with the difference that it taxes intermediate and possibly capital goods. It is charged on gross sales revenue from business transactions.

Unlike a sales tax, which is levied only on gross value at the point of retail sale, a turnover tax is levied on all intermediate transactions between businesses leading to and including the final sale.