Public Finance-Online Practice Exam 2
Public Finance-Online Practice Exam 2

Public Finance-Online Practice Exam 2

NET / SET Online Practice Exams

Public Finance

Test

Multi-choice 2

Question

1. Distribution of the burden of paying a tax is called-

Answers

Tax capitalisation

Shifting of the tax

Sharing of tax burden

Incidence of a tax

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Question

2. Consider the following statements-

  1. In the context of the classical model loan finance may be a means of transferring the burden to the future generation.
  2. Foreign borrowing permits financing public programmes without placing a burden on the present generation
  3. Foreign borrowing is not burden some to the  future generations even if the funds are unproductively.

Of the above statements-

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1 alone is correct

1 and 2 are correct

1 and 3 are correct

2 and 3 are correct

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Question

3. If supply is perfectly inelastic, then the short run impact of a specific sales tax would be to shift the tax burden-

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entirely on to the producers

entirely on to the consumers

equally between the producers and the consumers

on the other goods where the supply condition may be more elastic

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Question

4. In a many person economy with a public and a private goods, revenue allocation will be optimal at the point where-

Answers

the marginal rate of substitution (MRS) is equal to the marginal rate of transformation (MRT) for each individual considered separately

the summation of the MRS is equal to the MRT

the MRS is not equal to the MRT since we are dealing with a public goods

None of the above conditions obtain

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Question

5. Assuming a declining marginal utility of money schedule, which one of the following principles will call for “maximum progression”?

Answers

Principle of equal absolute sacrifice

Principle of equal proportional sacrifice

Principle of equal marginal sacrifice

None of the above

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Question

6. Fiscal and Monetary Policies are intended to combat-

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Cyclical unemployment

Structural unemployment

Both (A) and (B)

Frictional unemployment

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Question

7. The imposition of a Selective Sales Tax will raise the price of the taxed product by equal amount if it is produced under-

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constant cost

increasing cost

decreasing cost

imperfect competition

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Question

8. Provision of social goods possess problem because-

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Such goods tend to be non-rival in consumption

Consumption preferences with respect to such goods are not revealed

Market mechanism is not well suited for the provision of such goods

All of the above

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Question

9. Given a proportional income tax structure and balanced budget, an autonomous increase in investment will increase the level of equilibrium income and the budget will-

Answers

still be in balance

have a surplus

have a deficit

the outcome is uncertain

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Question

10. Which one of the following is not a source of the “Union Tax revenue”?

Answers

Corporate taxes

Customs duties

Property taxes 

Property taxes 

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