public finance fiscal & monetary policy section 7 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (b)

In terms of individual income and wealth, a regressive tax imposes a greater burden on the poor than on the rich.

There is an inverse relationship between the tax rate and the taxpayer’s ability to pay, as measured by assets, consumption, or income.

These taxes tend to reduce the tax burden of the well-to-do, as they shift the burden disproportionately to the needy.

Answer: (c)

All asset creating and productive expenditure is part of plan expenditure, and all non-productive, consumptive and non- asset-building expenditure is part of non-plan expenditure.

Non-plan expenditure is further divided into revenue expenditure and capital expenditure

Answer: (d)

In economics, an implicit is the opportunity cost equal to what a firm must give up in order to use factors which it neither purchases nor hires.

It is the opposite of an explicit cost, which is borne directly. In other words, an implicit cost is any cost that results from using an asset instead of renting, selling, or lending it. These are costs a business incurs without actually spending money.

Answer: (a)

The 'Principle of Maximum Social Advantage' was introduced by British economist Hugh Dalton.

According to Dalton, “The best system of public finance is that which secures the maximum social advantage from the operations which it conducts."

Answer: (d)