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CUET-UG Economics / Business Economics Test: Public Finance (Government Budget & Economy)
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Public finance is the study of the role of the government in the economy. It is the branch of economics that assesses the government revenue and government expenditure of the public authorities and the adjustment of one or the other to achieve desirable effects and avoid undesirable ones.

CUET-UG Economics / Business Economics Test: Public Finance (Government Budget & Economy)
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25 Questions

1. Assertion (A) : A progressive income tax is based on equimarginal sacrifice.
Reason (R) : Higher the income, lower will be the marginal utility of money for the taxpayer.
2. It is generally believed that a rise in the tax rate would normally lead to a rise in the revenue. But there is also a view the reduced rates on income tax would lead to a significant rise in income tax revunue. This later view has been attributed to
3. Match List I with List II and select the correct answer using the codes given below the lists– (a) Service Tax 1. Central government (b) Stamp duty 2. State government (c) Property tax (d) Sales tax Codes: (a) (b) (c) (d)
4. Which of the following come under non-plan expenditure of Government of India?

I. Subsidies
II. Interest payment
III. Defence expenditure
IV. Expenditure on development of infrastructure
Choose the correct answer from the codes given below
5. Union Excise duties are a part of Central Governments
6. The MODVAT scheme of taxation benefits
7. Central assistance for state and UT Plan is a part of
8. Which is false about the rising of fiscal deficit in India?
9. Which tax is collected by Panchayat?
10. Which of the following taxes is levied by the State Government only?
11. Which of the following pairs are examples of direct tax?

1. Income Tax and Wealth Tax.
2. Sales Tax and Excise Duty.
3. Capital gains Tax and Corporation Tax.
Select the correct answer using the codes given below
12. Municipalities finance their expenditure by imposing among others
13. In a.......budget revenue equals expenditure.
14. Indirect tax are objectionable because they
15. Fiscal Policy is not effective when
16. Food and fertilizer subsidies are included in
17. The government has recently stressed the importance of limiting the quantum of fiscal deficit to 5 per cent of GDP. In this context fiscal deficit has been defined as the
18. Consider the following statements A government may cover up the deficit by
1. Withdrawing its cash balances from the central bank of the country.
2. borrowing from the central bank and commercial banks.
3. printing new money. Of these statements
19. Which one of the following statements is incorrect?
20. The Union Government does NOT issue one of the following
21. Which of the following is a Direct tax?
22. Which one of the following is the most important source of revenue of state governments in India?
23. Fiscal deficit in the Union Budget means:
24. Budgetary deficit of the Government of India is equal to
25. Agricultural taxation in India is difficult because of

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