Tag: meaning and scope of public finance

Questions Related to meaning and scope of public finance

What is 'winner's curse'?

economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

  1. In takeovers of companies, at times, the real benefit goes to the company, being taken over

  2. The possibility that the winning bidder in a auction will pay too much cost for an asset

  3. In mergers, usually the stronger firm gains but it pays a very high cost

  4. None of the above

Show answer
Correct Option: B
Explanation:

This takes place due to the fact that the winning bidder places a higher value on the asset than all other bidders-ultimately paying too much for the asset(thus, the curse of winner is that it wins but after paying very high a cost).

Fiscal capacity of the states in India is hugely compromised due to their lower revenue mobilisation in comparison to the other federal governments of the worldconsider the following statements and select the correct answer, using the code given below:
1. States in India generate very low share, of about $6$ per cent, of their revenue from direct taxes while the figure is $19$ per cent in case of Brazil and $44$ per cent in case of Germany.
2. Urban local bodies of India are closer to international norms in collecting revenue from direct taxes that is $18$ per cent of their total fundsbeing 1$19$ per cent in case of Brazil and $26$ per cent in case of Germany. 

economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

  1. Only 1

  2. Only 2

  3. 1 and 2

  4. Neither 1 nor 2

Show answer
Correct Option: C
Explanation:

Direct taxes account for about 7070 per cent of total taxes in Europe, in india the figure is around 3535 percent. The newly implemented GST might reinforce this if turns out to be a buyant source of revenue.

Select the incorrect one/ones about short-term finance in India from the given list using the code given below:
1. It fulfills the GoI, corporate houses, financial institutions, bank and the SBI DFHI.
2. Banks have been made available the least number of instruments of the money market in India.

economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

  1. Only 1

  2. Only 2

  3. 1 and 2

  4. Niti Aayog

Show answer
Correct Option: C
Explanation:

Both the statement are incorrect. If DFHI is not in the list, Statement 1 will become correct and similarly, money market of India makes maximum number of its instruments available to the banks (they are Call Money, Certificate of Deposit and Commercial Paper and the Repo).

Select the correct means by which the GoI manages its needs of deficit financing, using the code given below:
1. By printing currencies and internal borrowing
2. External grants, disinvestment proceeds and external borrowings

economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

  1. Only 1

  2. Only 2

  3. 1 and 2

  4. Neither 1 nor 2

Show answer
Correct Option: C
Explanation:

Had 'disinvestment proceeds' not been there, the second statement would also have been correct till 2004. Disinvestment proceeds used to be one of the means of raising money to meet fiscal deficit requirements till 2005 unitll there was no National Investment Fund (the proceeds now go directly into this fund and are considered Public Accounts of India since 2013.

Which of the following is/are correct about India's present fiscal situation?
1. Aggregate tax to GDP ratio of India is around 17 per cent.
2. The tax to GDP ratio of the Government of India (GoI) is around 10 per cent.
3. The tax to GDP ratio of the GoI falls to around 6.5 per cent after devolution to states.

economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

  1. Only 1

  2. Only 2

  3. 1 and 2

  4. 1,2 and 3

Show answer
Correct Option: D

In comparison to revenue deficit, the size of fiscal deficit is always _____.

economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

  1. higher

  2. smaller

  3. similar

  4. uncertain

Show answer
Correct Option: A
Explanation:

The fiscal deficit is the difference between the total revenue and total expenditure of the government. Revenue deficit hence arises when the government's actual net receipts is lower than the projected receipts. So, the size of fiscal deficit is always higher than revenue deficit.

Pick out the item which is not a part of non-plan expenditure on the revenue side.

economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

  1. Defence

  2. Central Assistance to states

  3. Subsidies

  4. None of the above

Show answer
Correct Option: B
Explanation:

Central assistance to states is not a part of non-plan expenditure on the revenue side. Non-plan revenue expenditure is accounted for by interest payments, subsidies (mainly on food and fertilisers), wage and salary payments to government employees, grants to States and Union Territories governments, pensions, police, economic services in various sectors, other general services such as tax collection, social services, and grants to foreign governments. 

Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment is called ________.

economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

  1. capital expenditure

  2. revenue expenditure

  3. both A and B

  4. none

Show answer
Correct Option: A
Explanation:

Capital expenditure are funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment. It is often used to undertake new projects or investments by the firm. 

The government manages public finance through _____________.

economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

  1. annual budget

  2. revenue it generates

  3. private finance

  4. none of the above

Show answer
Correct Option: B
Explanation:

Government generates revenue which it uses to manage it towards public works to be done.

 Bharat Nirman, MGNREGA are examples of _______.

economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

  1. plan expenditure

  2. non-plan expenditure

  3. capital expenditure

  4. none of the above

Show answer
Correct Option: A