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12th Grade > Economics - 2

FISCAL POLICY MCQs

Total Questions : 30 | Page 2 of 3 pages
Question 11. Which of these is the one-for-all tax that replaced every other indirect tax?
  1.    Sales tax
  2.    VAT
  3.    GST
  4.    Customs duty
 Discuss Question
Answer: Option C. -> GST
:
C
GST ( Goods and Services Tax) is the indirect tax that replaced every other indirect tax.
Question 12. If borrowing and other liabilities are added to the budget deficits we get_______________ :
  1.    Fiscal Deficit
  2.    Primary Deficit
  3.    Capital Deficit
  4.    Revenue Deficit
 Discuss Question
Answer: Option A. -> Fiscal Deficit
:
A
Fiscal deficit estimates borrowings.
Question 13. Which one of the following statements appropriately describes the “fiscal stimulus”?
  1.    It is a massive investment by the Government in the manufacturing sector to ensure that the supply of goods meets the demand surge caused by rapid economic growth.
  2.    It is an intense affirmative action of the Government to boost economic activity in the country. 
  3.    It is the Government’s intensive action on financial institutions to ensure disbursement of loans to agriculture and allied sectors to promote greater food production and contain food inflation. 
  4.    It is an extreme affirmative action by the Government to pursue its policy of financial inclusion. 
 Discuss Question
Answer: Option B. -> It is an intense affirmative action of the Government to boost economic activity in the country. 
:
B
Fiscal stimulus is a measure taken by the government to boost spending and the growth of the economy.
Question 14. An ad valorem duty is a tax on the basis of:
 
  1.    The price of a commodity
  2.    The value added
  3.    The advertisement expenditure
  4.    The unit of the commodity
 Discuss Question
Answer: Option A. -> The price of a commodity
:
A
Ad valorem depends on the price of the commodity.
Question 15. Match the government policy given to the appropriate type: “cutting income tax rate”
  1.    Expansionary fiscal policy
  2.    Contractionary fiscal policy
  3.    Expansionary monetary policy
  4.    Contractionary monetary policy
 Discuss Question
Answer: Option A. -> Expansionary fiscal policy
:
A
Cutting the income tax rate is a expansionary fiscal policy.
Question 16. If the government spending multiplier is found to be 1, what is the marginal propensity to consume?
  1.    0
  2.    0.2
  3.    0.5
  4.    1
 Discuss Question
Answer: Option A. -> 0
:
A
When c=0,1(1−c)=1. The marginal propensity to consume in this case is zero. However, this is not a possibility in reality.
Question 17. The difference between revenue expenditure and revenue receipts is:
  1.    Revenue deficit
  2.    Fiscal deficit
  3.    Budget deficit
  4.    Primary deficit
 Discuss Question
Answer: Option A. -> Revenue deficit
:
A
The excess of revenue expenditures over revenue receipts is called revenue deficit.
Question 18. If people with higher incomes pay higher taxes, the system is called: 
  1.    Value Added Tax
  2.    Progressive Tax
  3.    Sales Tax
  4.    Regressive Tax
 Discuss Question
Answer: Option B. -> Progressive Tax
:
B
This type of tax is called a progressive tax.
Question 19. Transfer payments are ______ income to get personal disposable income.
  1.    Added to
  2.    Subtracted from
  3.    Excluded from
  4.    Not a part of
 Discuss Question
Answer: Option A. -> Added to
:
A
Transfer payments are added to income to get personal disposable income.
Question 20. Which of the following is a major source of revenue for the government? 
  1.    Personal income tax
  2.    Corporate tax
  3.    Legal fees
  4.    Entertainment tax
 Discuss Question
Answer: Option A. -> Personal income tax
:
A
Personal income tax is the biggest revenue source.

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