12th Economics Book Back Question and Answer Tamil Medium & English Medium
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12th Economics Book Back Question and Answer Tamil Medium & English Medium
Chapter 9- Fiscal Economics
Introduction
- The term ‘Fiscal Economics’ is a new one; the old and popular term of the subject is ‘Public Finance’. The subject Public Finance is related to the financing of the State activities and it discusses the financial operations of the Government treasury. The term fiscal is derived from Greek word which means basket and symbolizes the public purse. Hence the subject ‘Public Finance’ has been newly termed ‘Fiscal Economics’.Public Finance studies the manner in which the state raises and spends the resources. The state is concerned with the collective wants of the citizens. The modern state is a welfare state. The activities of the state have increased extensively and intensively. To perform these activities, the state needs funds. This chapter deals with the Public Revenue, Public Expenditure, Public Debt, Budget,
Federal Finance and Local Finance.
Meaning of Public Finance
Public finance is a study of the financial aspects of Government. It is concerned with the revenue and expenditure of the public authorities and with adjustment of the one to the other.
Definitions
“Public finance is one of those subjects that lie on the border line between Economics and Politics. It is concerned with income and expenditure of public authorities and with the adjustment of one to the other”.
-Huge Dalton
“Public finance is an investigation into the nature and principles of the state revenue and expenditure”.
-Adam Smitlist
1. The modern state is
a) Laissez-faire state
b) Aristocratic state
c) Welfare state
d) Police state
2. One of the following is NOT a feature of private finance
a) Balancing of income and
expenditure
b) Secrecy
c) Saving some part of income
d) Publicity
3. The tax possesses the following characteristics
a) Compulsory
b) No quid pro quo
c) Failure to pay is offence
d) All the above
4. Which of the following canons of taxation was not listed by Adam smith?
a) Canon of equality
b) Canon of certainty
c) Canon of convenience
d) Canon of simplicity
5. Consider the following statements and identify the correct ones.
i. Central government does not have exclusive power to impose tax which is not mentioned in state or concurrent list
ii. The Constitution also provides for transferring certain tax revenues from union list to states.
a) i only
b) ii only
c) both
d) none
6. GST is equivalence of
a) Sales tax
b) Corporation tax
c) Income tax
d) Local tax
7. The direct tax has the following merits except
a) equity
b) convenient
c) certainty
d) civic consciousness
8. Which of the following is a direct tax?
a) Excise duty
b) Income tax
c) Customs duty
d) Service tax
9. Which of the following is not a tax under Union list?
a) Personal Income Tax
b) Corporation Tax
c) Agricultural Income Tax
d) Excise dabove
10. “Revenue Receipts” of the Government
do not include
a) Interest
b) Profits and dividents
c) Recoveries and loans
d) Rent from property
11. The difference between revenue
expenditure and revenue receipts is
a. Revenue deficit
b. Fiscal deficit
c. Budget deficit
d. Primary deficit
12. The difference between total
expenditure and total receipts
including loans and other liabilities is
called
a. Fiscal deficit
b. Budget deficit
c. Primary deficit
d. Revenue deficit
13.The primary purpose of deficit
financing is
a) Economic development
b) Economic stability
c) Economic equality
d) Employment generation
14. Deficit budget means
a) An excess of government’s revenue
over expenditure
b) An excess of government’s current
expenditure over its current
revenue
c) An excess of government’s total
expenditure over its total revenue
d) None of above
15. Methods of repayment of public debt
is
a) Conversion
b) Sinking fund
c) Funded debt
d) All these
16. Conversion of public debt means
exchange of
a) new bonds for the old ones
b) low interest bonds for higher
interest bonds
c) Long term bonds for short term
bonds
d) All the above
17. The word budget has been derived
from the French word “bougette”
which means
a) A small bag
b) An empty box
c) A box with papers
d) None of the above
18. Which one of the following deficits
does not consider borrowing as a
receipt?
a) Revenue deficit
b) Budgetary deficit
c) Fiscal deficit
d) Primary deficit
19. Finance Commission determines
a) The finances of Government of
India
b) The resources transfer to the states
c) The resources transfer to the
various departments
d) None of the above
20. Consider the following statements and identify the right ones.
i. The finance commission is appointed by the President
ii. The tenure of Finance commission is five years
a) i only
b) ii only
c) both
d) none
Part B
Two mark questions
21. Define public finance.
22. What is public revenue?
23. Differentiate tax and fee.
24. Write a short note on zero based budget.
25. Give two examples for direct tax.
26. What are the components of GST?
27. What do you mean by public debt?
Part C
28. Three mark questions:
29. Describe canons of Taxation.
30. Mention any three similarities between public finance and private finance.
31. What are the functions of a modern state?
32. State any three characteristics of taxation.
33. Point out any three differences between direct tax and indirect tax.
34. What is primary deficit?
35. Mention any three methods of redemption of public debt.
Part D
36. Five mark questions:
37. Explain the scope of public finance.
38. Bring out the merits of indirect taxes over direct taxes.
39. Explain the methods of debt redemption
40. State and explain instruments of fiscal policy.
41. Explain the principles of federal finance.
42. Describe the various types of deficit in budget.
43. What are the reasons for the recent growth in public expenditure?