1.

Scope of public finance includes:

A. Public revenue

B. Public debt

C. Public expenditure

D. All of these

2. Public Authorities Include:

A. Central Government

B. State Government

C. Local Government

D. All of these

3. Who is the father of Public Finance:

A. Dalton

B. Pigou

C. Smith

D. Musgrave

4. Which is the main point on the basis of which public finance can be separated from
private finance:

A. Price policy

B. Borrowings

C. Secrecy

D. Elasticity in income

5. In the following which is the characteristic of a tax

A. Compulsory

B. Optional

C. Forced
 D. Nationality

6. Which is the main objective of a tax:

A. Increase in consumption

B. Increase in production

C. Raising public revenue

D. Reduction in capital formation

7. Among the following canons of taxation which one has been given by Adam Smith:

A. Canon of Uniformity

B. Canon of productivity

C. Canon of diversity

D. Canon of equity

8. The Indian tax system is:

A. Proportional

B. Progressive

C. Regressive

D. Degressive

9. The burden of direct taxes is borne by:

A. Rich person
B. Poor person
C. On whom it is levied
D. None of these
10. Indirect taxes have an element of:
A. Equitable
B. Certainty
C. Economical
D. Encourage honesty
11. Direct taxes have the element of:
A. Evasion
B. Convenient
C. Progressive
D. Economy
12. In proportional tax system, the rates of tax remain:
A. Constant
B. Increasing
C. Decreasing
D. Zero
13. Expenditure Tax for India was recommended by:
A. Kaldor
B. Colin Clarke
C. Adam Smith
D. Adolph Wagner
14. Adolph Wagner was a ____________________ Economist:
A. French
B. German
C. Indian
D. American
15. Who is the exponent of Law of Increasing State Activities?
A. Dalton
B. Pigou
C. Smith
D. Wagner
16. Corporate Income tax is the tax levied on:
A. Corporations
B. Municipalities
C. Co-operative societies
D. Companies
17. Which of the following is the major source of revenue in India:
A. Direct tax
B. Capital Levy
C. Grants in aid
D. Indirect tax
18. Which of the following is not a Commodity Tax:
A. Excise duty
B. Customs Duty
C. Corporation Tax
D. Octroi
19. A duty levied on goods when they entering a town
A. Income tax
B. Octroi
C. Agricultural tax
D. Professional tax
20. Special Assessment means:
A. A tax on special benefits
B. General tax on all people
C. A periodical tax
 D. Gift tax
21. Non‐rivalry and non‐excludability are the characteristics of:
A. Normal goods
B. Demerit goods
C. Inferior goods
D. Public goods

22. Public goods are non‐rival if

A. Some people cannot be prevented from consuming it
B. Consumption by one person reduces consumption of other individuals
C. Some people are excluded from consuming it
D. all the above
23. Free rider problem is one of the characteristics of
A. Private good
B. Public good
C. Merit good
D. Mixed good
24. Private goods are characterized by
A. Application of exclusion principle
B. Rivalry in consumption
C. Payment of prices
D. All the above
25. Education is an example of:
A. Public good
B. Merit good
C. Social good
D. Club good
26. Merit goods means:
A. Public good
B. Free good
C. Rare good
D. White good
27. Those goods whose consumption and use are to be encouraged are called
A. Private good
B. Public good
C. Merit good
D. Mixed good
28. The concept of Merit good was introduced by
A. Dalton
B. Keynes
C. R A Musgrave
D. None of these
29. Incidence of tax means:
A. Direct money burden
 B. Indirect money burden
C. Actual tax burden
D. None of these
30. Which is the tax shifting?
A. To bear the tax burden himself
B. To shift the tax burden on others
C. To bear some part of the tax himself and shift the rest on others
D. None of these
31. Incidence of a tax refers to the ________________ burden of tax:
A. Initial
B. Ultimate
C. Intermediate
D. None
32. Which tax cannot be shifted to others?
A. Excise duty
B. Sales tax
C. Entertainment tax
D. Wealth tax
33. A tax that can be shifted is called:
A. Direct tax
B. Progressive tax
C. Indirect tax
D. None
34. The final resting place of the burden of tax is called:
A. Tax avoidance
B. Tax evasion
C. Impact
D. Incidence
35. In the case of direct tax, impact and incidence are on:
A. Different person
B. Same person
C. Sellers
D. None of these
36. The modern theory of tax incidence was developed by
A. Dalton
B. Keynes
C. R A Musgrave
D. None of these
37. Elastic revenue response to marginal tax rate reductions is called:
A. Marginal tax curve
B. Functional curve
C. Laffer curve
D. None of these
38. Laffer curve suggest that the
A. Relationship between tax revenue and tax rates is U‐shaped
B. Relationship between GDP growth rate and tax rates is U‐shaped
 C. Relationship between tax revenue and tax rates is inverted U‐shaped
D. Relationship between savings rate and tax rate is inverted U‐shaped
39. There is a view that reduced rates on income tax would lead to a significant rise in
income tax revenue. This view has been attributed to
A. Herbert Simon
B. Arthur Laffer
C. Robert Lucas
D. J.B. Say
40. In the case of regressive tax, the rate of tax ________ as income increases:
A. increases
B. remains constant
C. decreases
D. None
41. Ad Valorem duties are levied on:
A. Length
B. Weight
C. Utilities
D. Value
42. Tax avoidance is:
A. Illegitimate
B. Legitimate
C. Punishable
D. None
43. The VAT was first introduced in:
A. India
B. Britain
C. USA
D. France
44. The first state to introduce VAT was
A. Bihar
B. Orissa
C. Haryana
D. Kerala
45. The VAT was first introduced in the year
A. 2003
B. 2004
C. 2005
D. 2006
46. Customs duties are imposed on commodities as they cross:
A. State boundaries
B. District boundaries
C. National boundaries
D. Municipal boundaries
47. Contra-cyclical fiscal policy was popularised by:
A. Adam Smith
B. Dalton
 C. J.B. Say
D. Keynes
48. Deficit financing as a tool of fiscal policy was suggested by:
A. Keynes
B. Dalton
C. J.B. Say
D. Marshall
49. Keynes popularised:
A. Monetary policy
B. Fiscal Policy
C. Income policy
D. Price policy
50. The practice by Governments in which a government spends more money than it receives
as revenue is referred to as:
A. Piggy backing
B. Direct Funding
C. Deficit financing
D. Pump Priming
51. Deficit financing may lead to:
A. Poverty
B. Unemployment
C. Inflation
D. Deflation
52. Deficit financing includes
A. Borrowing from the Central Bank
B. Issues of new currency by the Government
C. Withdrawal of past accumulated cash balance by the government
D. All the above
53. The balanced budget principle was advocated by:
A. Keynesians
B. Mercantilists
C. Classical school
D. Neo-Classical school
54. The item or economic activity on which tax is imposed is known as
A. Tax buoyancy
B. Tax rate
C. Excess burden
D. Tax base
55. Which one of the following is not a tax base?
A. Income
B. Wealth
C. Utility
D. Consumption
56. Which one of the following is a tax base
A. Income
B. Utility
 C. Intelligence
D. None of these
57. Equals treated equally in taxation leads to:
A. Vertical equity
B. Real equity
C. Horizontal equity
D. None

58. The largest component of revenue expenditure in India is:

A. Pension
B. Interest payments
C. Education
D. Health
59. Expenditures incurred on civil administration, defence forces is in the nature of
A. Capital Expenditure
B. Revenue Expenditure
C. Transfer Expenditure
D. Productive Expenditure
60. The Classical economists asserted that public expenditure is:
A. Unproductive
B. Productive
C. Stagnant
D. All of these
61. The fiscal deficit excluding the interest liabilities for a year is called as
A. Revenue deficit
B. Capital deficit
C. Budget deficit
D. Primary deficit
62. The FRBM Act was passed in:
A. 1991
B. 2001
C. 2003
D. 2011
63. The Zero-based budgeting was first adopted in:
A. India
B. France
C. Germany
D. USA
64. Who proposed the Zero-based budgeting for the first time:
A. David Ricardo
B. Alfred marshall
C. Adam Smith
D. Peter Phyrr
65. Gender budgeting started in India with the Union budget of:
 A. 1991-92
B. 2001-02
C. 2006-07
D. 2010-11
66. Which of the following is a Statutory Body?
A. Finance Commission
B. Planning Commission
C. State Planning Board
D. None of these
67. The Finance Commission in India is appointed by:
A. President
B. Prime Minister
C. Chief Minister
D. Finance Minister
68. The First Finance Commission was appointed in the year:
A. 1949
B. 1950
C. 1951
D. 1952
69. Chairman of the first Finance Commission:
A. Chadha
B. K.C. Neogi
C. Santhanam
D. Y.V. Chavan
70. Grants recommended by the Finance Commission are known as:
A. Plan Grants
B. Conditional Grants
C. Statutory Grants
D. Conditional Grants
71. The Finance Commission does all the following functions except one, which is that?
A. Works out allocation of taxes in the divisible pool
B. Looks into financial relations between the Centre and the States
C. Allocates grants‐in-aid to the States and Union Territories
D. Assist the Planning Commission in making 5 year plans.
72. Finance Commission determines
A. The finances of Government of India
B. The resources transfer to the State
C. The resources transfer to the various departments
D. None of the above
73. Public Debt means

A. Borrowing by a Government from abroad and does not include borrowing

from within the country
 B. Borrowing by general public, private individuals or association of
individuals from the Government which they need to repay to Government
under the prescribed terms and conditions

C. Borrowing by General Public in the form of loans or advances from the

Government, Local Bodies, Government owned financial institutions

D. Borrowing by a Government from within the country or from abroad,

from private individuals or association of individuals or from banking
and non-banking institutions

74. Public Debt Management refers to

A. Terms of new bonds

B. Proportion of different components of public debt

C. Maturity

D. All the above

75. Which of the following factors contribute to public debt of a country?

A. To undertake public welfare

B. Urge for economic growth

C. Inefficiencies of public organisations and corruption

D. All of the above

76. Which of the following could be a reason for raising public loans by a country?

A. Bringing gap between revenue and expenditure through temporary loans

from central bank.

B. To reduce depression in the economy and financing public works

programme.

C. Financing the public sector for expanding and strengthening the public
enterprises

D. All of the above

77. Which of the following are the causes of public debt of a country?

A. War or war-preparedness, including nuclear programmes

 B. To cover the budget deficits on current account

C. To undertake public welfare schemes

D. All of the above

78. Shortcoming of public debt is:

A. Political slavery

B. Danger of insolvency

C. Danger to country's freedom

D. All of the above

79. The burden of long term public debt is on:

A. Present generation

B. Past generation

C. Future generation

D. None of these

80. Which one of the following is not a method for redeeming public debt?

A. Sinking fund

B. Capital levy

C. Terminal annuities

D. Grants in aid

81. The debts which the government promises to pay off at a specified date are called

A. Irredeemable debts

B. Funded debts

C. Redeemable debts

D. Unfunded debts

82. Short-period debts are called as:

A. Unfunded debts
 B. Funded debts

C. Redeemable debts

D. None

83. Unfunded debts are also known as

A. Funded debts

B. Floating debts

C. Irredeemable debts

D. None

84. Treasury bills issued by the Government are in the nature of:

A. Funded debts

B. Floating debts

C. Irredeemable debts

D. None

85. Converting or altering a public debt from a higher to a lower rate of interest is referred to
as:

A. Conversion

B. Sinking Fund

C. Repudiation

D. Terminable Annuities

86. Deadweight debt refers to which of the following form of Public Debt?

A. Internal Debt

B. External Debt

C. Unproductive Debt

D. Productive Debt

87. Debt obligations of the government that have maturities of one year or less is normally
called
 A. Commercial Papers

B. Commercial Deposits

C. Treasury Bills

D. Certificate of Deposits

88. Redeemable debt is also called

A. Perpetual loans

B. Terminable loans

C. Flexible loans

D. Rigid Loans

89. Irredeemable debts are also called:

A. Perpetual debt

B. Terminable debt

C. Flexible debt

D. Unproductive debt

90. A Funded Debt refers to a

A. A Short term loan

B. A Short term Deposit

C. A Long Term Loan

D. Ways and Means Advances

91. ______________ refers to refusal to repay the debt.

A. Repudiation

B. Capital levy

C. Sinking fund

D. None of the above

92. Which of the following is NOT an accepted method of redemption of public debt?
 A. Repudiation of Public Debt

B. Refunding

C. Conversion

D. Sinking Fund Method

93. Which of the following method of public debt redemption is most UNLIKELY to be
resorted to by the Government?

A. Conversion

B. Sinking Fund

C. Repudiation

D. Terminable Annuities

94. Public burden on account of public debt is generally classified as:

A. Productive Burden and Unproductive Burden

B. Money burden and Real Burden

C. Consumption burden and Distribution burden

D. Debt burden and Finance Burden

95. A fund created by the government and gradually accumulated every year by setting aside
a part of current public revenue in such a way that it would be sufficient to pay off the
funded debt at the time of maturity is called
A. Consolidated Fund
B. Equity Fund
C. Credit Fund
D. Sinking Fund

96. Which of the following are the purposes for raising public loans?
A. Bringing gap between revenue and expenditure through temporary loans
from central bank.
B. To reduce depression in the economy and financing public works
programme.
C. To curb inflation by withdrawing the purchasing power from the public
D. All of the Above
97. When the government raises revenue by borrowing from within the country is known as
A. Voluntary debt
 B. Compulsory Debt
C. Internal debt
D. External debt
98. In which of the following situations, any direct money burden on the society is least
likely?
A. Raising and repayment of internal debt
B. Raising and repayment of external debt
C. Raising and repayment of internal debt taken for unproductive purposes
D. Raising and repayment of long term debt from external agencies
99. Which of the following would refer to the self-liquidating form of public debt?
A. Internal Debt
B. External Debt
C. Productive Debt
D. Short-Term Loan
100. Which of the following could be a purpose for raising public loans?
A. Financing economic development esp. in under-developed countries.
B. Financing the public sector for expanding and strengthening the public
enterprises.
C. War, arms and ammunition financing
D. All of the above
101. Treasury Bills fall under the category of
A. Funded Debt
B. Unfunded Debt
C. External Debt
D. Productive Debt
102. ___________ is the debt which is paid any legal enforcement.
A. Voluntary debt
B. Compulsory Debt
C. Internal debt
D. External debt
103. A one-time tax on all wealth holders with the goal of retiring public debt is
generally referred to as
A. Indirect Tax
B. Capital Levy
C. Orthodox Tax
D. Socialist Tax
104. _________________ is a special type of “once for all” tax on capital imposed to
repay war debts.
A. Repudiation
B. Refunding
C. Conversion
D. Capital levy
105. Capital Levy method has been advocated by
A. Keynes
B. Musgrave
C. Ricardo
 D. None of these
106. ____________ is the process of replacing maturing securities with new
securities.
A. Repudiation
B. Refunding
C. Conversion
D. Capital levy
107. Public debt leads to extravagance, encouraged resort to war and induced bad
economic conditions. This statement is of:
A. Dalton
B. Adam Smith
C. J.K. Mehta
D. Findley Shirras
108. Author of ‘General Theory of Employment, Interest and Money’:
A. Dalton
B. Marshal
C. Keynes
D. Musgrave
109. Functional Finance concept was introduced by:
A. Marx and Angels
B. Keynes and Lerner
C. Dalton and Pigou
D. J.S. Mill
110. Modified Value Added Tax was introduced in India in:
A. 1951
B. 1986
C. 1991
D. 1976
111. Agricultural Holding Tax was recommended by:
A. Adam Smith
B. K.N. Raj
C. Chelliah
D. Marshall
112. The action taken to stimulate an economy, usually during a recessionary period,
through government spending, and interest rate and tax reduction is called:
A. Force Funding
B. Piggy backing
C. Direct Funding
D. Pump Priming
113. Pump Priming is related with:
A. Monetary policy
B. Income policy
C. Price policy
D. Fiscal policy
114. The basic principle of public finance is:
A. Maximum Social Advantage
 B. Welfare of the Government
C. Welfare of the Individual
D. All of the above
115. “The best system of public finance is that which secures the maximum social
advantage from the operations which it conducts” is the dictum of
A. Adam Smith
B. Dalton
C. J.B. Say
D. Marshall

116. The 'Principle of Maximum Social Advantage' was introduced by

A. Hugh Dalton
B. Adam Smith
C. Franco Modigliani
D. Sir Arthur Lewis
117. Maximum Social Advantage is achieved,
A. at the point where the marginal social benefit of public expenditure
and the marginal social sacrifice of taxation are equated
B. at the point where the marginal social benefit of public expenditure is
higher than the marginal social sacrifice of taxation
C. at the point where the marginal social benefit of public expenditure is
lower than the marginal social sacrifice of taxation
D. at the point where the marginal social benefit of public expenditure and
the marginal social sacrifice of taxation are zero
118. Which of the following is not a fiscal instrument?
A. Open market operations
B. Public expenditure
C. Taxation
D. Budget
119. Modern Canons of taxation are propounded by:
A. Bastable
B. Adam Smith
C. Seligmon
D. Pigou
120. Sound tax policy is devised mainly on the basis of:
A. Maximum tax revenue
B. Elastic tax base
C. High income elasticity
D. High price elasticity
121. The Kelkar Proposals are concerned with:
A. Recommendations for reforms in the power sector
B. Recommendations for tax reforms
C. Guidelines for the privatization of public sector undertakings
D. None of the above
122. The direct violation of Tax law is called:
A. Tax evasion
B. Tax avoidance
C. Tax Rebate
D. None of these
123. Fiscal policy is the policy of:
A. RBI
B. NABARD
C. Government
D. All the above
124. The principle of judging fiscal measures by the way they work is called:
A. Personal Finance
B. Public Finance
C. Functional Finance
D. Local Finance
125. Which is the method of financial adjustment between Centre and States?
A. Tax sharing
B. Grant‐in‐aid
C. Public debt
D. Federal Finance
126. Which one of the following taxes is levied by the State Government only?
A. Entertainment tax
B. Corporation tax
C. Wealth tax
D. Income tax
127. The methods of restoring resource balance between different governments in a
federal set‐up is based on
A. Tax sharing
B. Grants-in‐Aid
C. Loans
D. All the above
128. Federal Finance deals with
A. State finances
B. Finances of railways
C. Local bodies
D. Centre‐State financial relations
129. The principle of federal finance which envisages that the resources should be
distributed among the different states of the federation so that each state receives a fair
share of revenue is referred to as
A. Principle of Equity
B. Principle of Uniformity
C. Principle of Fiscal Access
D. Principle of Independence
130. A multilevel decentralized fiscal system involving sharing of fiscal
responsibilities between central, state and local governments is referred to as:
A. Fiscal Union
 B. Fiscal Federalism
C. Fiscal Equalisation
D. Fiscal Generalism
131. The system of assigning the source of revenue to the Central as well as State
Governments is generally referred to as
A. Public Finance
B. Distributive Finance
C. Unitary Finance
D. Federal Finance
132. The modern state is:
A. Laissez–faire state
B. Welfare state
C. Aristocratic state
D. Police state
133. According to Musgrave the major functions of public finance is:
A. Allocative function
B. Distributive function
C. Stabilisation function
D. All the above
134. Who is the author of the book “The Theory of Public Finance”?
A. Dalton
B. R A Musgrave
C. A.R. Prest
D. Harvey Rosen
135. The controlling authority of Government expenditure is:
A. RBI
B. Planning Commission
C. Ministry of Finance
D. Finance Commission
136. The Indian income tax is:
A. Direct and proportional
B. Indirect and proportional
C. Indirect and progressive
D. Direct and progressive
137. The main objective of budgeting is:
A. Planning
B. Co‐ordination
C. Control
D. All of these
138. Wiseman‐Peacock hypothesis supports in a much stronger manner the possibility
of:
A. An upward trend in public expenditure
B. A downward trend in public expenditure
C. A constancy of public expenditure
D. A mixed trend in public expenditure
139. The increase in public expenditure doesn't follow any smooth and continuous
trend but the increase in public expenditure occurred in step like manner. This hypothesis
is called
A. Caldor’s model
B. Peacock and Wiseman Hypothesis
C. Wagner’s Law of Public Expenditure
D. Keynes Law of Public Expenditure
140. Peacock and Wiseman Hypothesis on public expenditure consists of three
concepts which are:
A. Subscription Effect, Tax Effect, Expenditure Effect
B. Tax Effect, Expenditure Effect, Consumption Effect
C. Displacement Effect, Concentration Effect, Inspection Effect
D. Consumption Effect, Labour Effect, Income Effect
141. According to Peackock Wiseman hypothesis, A discontinuity in the growth
pattern which produces expenditure peak during social disturbances is referred to as:
A. Displacement Effect
B. Concentration Effect
C. Inspection Effect
D. Substitution Effect
142. Fiscal Federalism refers to
A. Sharing of political power between centre and states
B. Organising and implementing economic plans
C. Division of economic functions and resources among different layers
of Government
D. None of these
143. Which one of the following is an optional function of Government?
A. Defense
B. Old Age Security
C. Law and Order
D. None of these
144. The most important aim of fiscal policy in a developing country is
A. Economic stability
B. Economic development
C. Regional balance
D. None of these
145. Non‐Plan Grants are determined by
A. Planning Commission
B. Finance Commission
C. Central Government
D. State Government
146. Public Expenditure increases
A. Interest rate
B. Employment
C. Exports
D. Imports
147. Escheat is an example of
 A. Direct tax
B. Indirect tax
C. Both A & B
D. None of these
148. Gift tax was introduced in the year
A. 1958
B. 1959
C. 1960
D. 1961

149. _________ is a broad based and a single comprehensive tax levied on goods and
services consumed in an economy
A. VAT
B. CENVAT
C. GST
D. None of these
150. In India GST was introduced in the year
A. 2016
B. 2017
C. 2018
D. 2019
151. ______________________ is the first country to implement GST
A. USA
B. U K
C. Canada
D. France
152. In which year GST was first introduced
A. 1952
B. 1953
C. 1954
D.
153. The Current financial transactions of the government which are of recurring in
nature is known as
A. Revenue budget
B. Capital budget
C. Surplus Budget
D. Deficit budget
154. ___________ is a statement of estimated capital receipts and payments of the
government over fiscal year.
A. Revenue budget
B. Capital budget
C. Surplus Budget
D. Deficit budget
155. When expenditure exceeds total tax revenue, it is called:
 A. Surplus budget
B. Balanced budget
C. Deficit budget
D. None of these
156. A tax levied at 5 percent on the first Rs. 10,000 of income, 10 percent on the next
Rs 20,000 and 12 percent on the next Rs 30,000 would be:
A. Progressive
B. Degressive
C. Regressive
D. Proportional
157. Which of the following is an imprest placed at the disposal of the President of
India to facilitate Government to meet urgent unforeseen expenditure pending
authorization from Parliament?
A. Consolidated Fund
B. Public Funds
C. Prime Ministers Relief Fund
D. Contingency Fund

158. Which of the following articles of the Indian Constitution provides for the
creation of the Consolidated Fund of India?
A. Article 371
B. Article 366
C. Article 266
D. Article 271

159. What is the full form of GST?

A) Goods and Supply Tax
B) Goods and Services Tax
C) General Sales Tax
D) Government Sales Tax
160. GST was implemented in India from
A) 1st January 2017
B) 1st April 2017
C) 1st March 2017
D) 1st July 2017
161. In India, the GST is based on the dual model GST adopted in:
A) UK
B) Canada
C) USA
D) Japan
162. GST is a consumption of goods and service tax based on
A) Development
B) Dividend
C) Destiny
D) Destination
163. The number of structures in India’s GST model is?
A) 6
B) 4
C) 3
D) 5
164. Taxes that are levied on any Intra-State purchase are?
A. IGST
B. CGST and SGST
C. SGST
D. SGST
165. What does “I” in IGST stands stand for?
A) Internal
B) Integrated
C) Internal
D) Intra