taxes types, methods & budgeting process section 4 MCQ Questions & Answers Detailed Explanation

Question : 1

The government can influence private sector expenditure by

1. taxation
2. subsidies
3. macro-economic policies
4. grants

a) 1, 2 and 3

b) 1, 2, 3 and 4

c) 1, 2 and 4

d) 3 and 4

Question : 2

Which of the following statements are true regarding "fiscal stimulus":

1. It is a strategy to boost the sluggish economy
2. RBI pumps money into the economy
3. Government reduces subsidies
4. Public spending increases

a) (i), (ii), & (iv) only

b) (i), (iii) & (iv) only

c) (i) & (ii) only

d) (i) & (iv) only

Question : 3

Which of the following should be considered for ‘Pigovian taxation’?

1. Consumption of cigarettes
2. Research for new technologies
3. Burning of fossil fuels
4. Restoration of lost cultural heritage

a) 1, 2 and 3

b) 1 and 3 only

c) 2, 3 and 4 only

d) 2 and 4 only

Question : 4

Which of the following is the characteristic of progressive tax?

1. Marginal tax rate should be increasing.
2. Marginal tax rates should be more than average tax rate.

a) Both 1 and 2

b) 1 only

c) 2 only

d) Neither 1 nor 2

Question : 5

Service tax was introduced in India on the recommendation of

a) Raja J. Chelliah Committee

b) Manmohan Singh Committee

c) Kelkar Committee

d) Yashwant Sinha Committee (E) None of the above/More than one of the above

Question : 6

Which of the following taxes is levied and collected by the Union but distributed between Union and States?

a) Tax on income other than on agricultural income

b) Tax on railway fares and freight

c) Corporation Tax

d) Customs