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Public Finance and Government Budgeting

Description: This quiz covers the fundamental concepts, theories, and practices related to Public Finance and Government Budgeting.
Number of Questions: 15
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Tags: public finance government budgeting fiscal policy taxation government expenditure
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Which of the following is a primary objective of Public Finance?

  1. To promote economic growth

  2. To ensure social welfare

  3. To regulate the economy

  4. To generate revenue for government spending


Correct Option: D
Explanation:

The primary objective of Public Finance is to generate revenue for government spending, which is necessary to provide public goods and services and fulfill government functions.

What is the role of government expenditure in the economy?

  1. To stimulate economic growth

  2. To redistribute income

  3. To stabilize the economy

  4. All of the above


Correct Option: D
Explanation:

Government expenditure plays multiple roles in the economy, including stimulating economic growth, redistributing income, and stabilizing the economy.

Which of the following is a progressive tax?

  1. Flat tax

  2. Proportional tax

  3. Graduated tax

  4. Regressive tax


Correct Option: C
Explanation:

A progressive tax is a tax where the tax rate increases as the taxable income increases. A graduated tax is an example of a progressive tax.

What is the difference between a direct tax and an indirect tax?

  1. Direct tax is paid by individuals, while indirect tax is paid by businesses.

  2. Direct tax is paid on income, while indirect tax is paid on goods and services.

  3. Direct tax is progressive, while indirect tax is regressive.

  4. Direct tax is more efficient than indirect tax.


Correct Option: B
Explanation:

Direct tax is levied directly on individuals or businesses, while indirect tax is levied on goods and services.

What is the concept of fiscal deficit?

  1. The difference between government revenue and government expenditure

  2. The difference between government expenditure and government revenue

  3. The difference between government borrowing and government lending

  4. The difference between government assets and government liabilities


Correct Option: B
Explanation:

Fiscal deficit is the difference between government expenditure and government revenue.

What is the role of government borrowing in public finance?

  1. To finance government expenditure

  2. To reduce government debt

  3. To stimulate economic growth

  4. To stabilize the economy


Correct Option: A
Explanation:

Government borrowing is used to finance government expenditure when revenue is insufficient to cover expenses.

What is the concept of public debt?

  1. The total amount of money owed by the government to its creditors

  2. The total amount of money owed by the government to its citizens

  3. The total amount of money owed by the government to foreign countries

  4. The total amount of money owed by the government to international organizations


Correct Option: A
Explanation:

Public debt is the total amount of money owed by the government to its creditors, including individuals, businesses, and other governments.

What is the significance of a balanced budget?

  1. It ensures fiscal discipline

  2. It promotes economic stability

  3. It reduces government debt

  4. All of the above


Correct Option: D
Explanation:

A balanced budget, where government expenditure equals government revenue, ensures fiscal discipline, promotes economic stability, and reduces government debt.

Which of the following is a type of government expenditure?

  1. Transfer payments

  2. Public investment

  3. Government consumption

  4. All of the above


Correct Option: D
Explanation:

Government expenditure includes transfer payments, public investment, and government consumption.

What is the concept of tax incidence?

  1. The distribution of the tax burden among different individuals or groups

  2. The total amount of tax revenue collected by the government

  3. The rate at which a tax is levied

  4. The method by which a tax is collected


Correct Option: A
Explanation:

Tax incidence refers to the distribution of the tax burden among different individuals or groups.

What is the role of government subsidies in public finance?

  1. To promote certain industries or activities

  2. To reduce the cost of living for certain groups

  3. To stimulate economic growth

  4. All of the above


Correct Option: D
Explanation:

Government subsidies are used to promote certain industries or activities, reduce the cost of living for certain groups, and stimulate economic growth.

What is the concept of externalities in public finance?

  1. The costs or benefits of an economic activity that are not reflected in the market price

  2. The costs or benefits of an economic activity that are borne or enjoyed by third parties

  3. The costs or benefits of an economic activity that are not taken into account by the government

  4. The costs or benefits of an economic activity that are not considered in the national income accounts


Correct Option: A
Explanation:

Externalities are the costs or benefits of an economic activity that are not reflected in the market price.

What is the role of public goods in public finance?

  1. They are provided by the government because they are non-excludable and non-rivalrous

  2. They are provided by the government because they generate positive externalities

  3. They are provided by the government because they are essential for economic growth

  4. All of the above


Correct Option: D
Explanation:

Public goods are provided by the government because they are non-excludable, non-rivalrous, generate positive externalities, and are essential for economic growth.

What is the concept of fiscal policy?

  1. The use of government spending and taxation to influence the economy

  2. The use of monetary policy to influence the economy

  3. The use of trade policy to influence the economy

  4. The use of industrial policy to influence the economy


Correct Option: A
Explanation:

Fiscal policy refers to the use of government spending and taxation to influence the economy.

What is the role of the central bank in public finance?

  1. To regulate the money supply

  2. To set interest rates

  3. To manage the government's debt

  4. All of the above


Correct Option: D
Explanation:

The central bank plays a crucial role in public finance by regulating the money supply, setting interest rates, and managing the government's debt.

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