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B Com Exam  >  B Com Tests  >  Public Finance  >  Test: Public Expenditure - B Com MCQ

Test: Public Expenditure - B Com MCQ


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10 Questions MCQ Test Public Finance - Test: Public Expenditure

Test: Public Expenditure for B Com 2024 is part of Public Finance preparation. The Test: Public Expenditure questions and answers have been prepared according to the B Com exam syllabus.The Test: Public Expenditure MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Public Expenditure below.
Solutions of Test: Public Expenditure questions in English are available as part of our Public Finance for B Com & Test: Public Expenditure solutions in Hindi for Public Finance course. Download more important topics, notes, lectures and mock test series for B Com Exam by signing up for free. Attempt Test: Public Expenditure | 10 questions in 10 minutes | Mock test for B Com preparation | Free important questions MCQ to study Public Finance for B Com Exam | Download free PDF with solutions
Test: Public Expenditure - Question 1
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What is the main characteristic that distinguishes revenue expenditure from capital expenditure in government budgeting?

Detailed Solution for Test: Public Expenditure - Question 1
Revenue expenditure refers to government spending that does not create assets or reduce liabilities. Capital expenditure, on the other hand, either creates assets or reduces liabilities. For example, if the government spends on repaying loans, it reduces its liabilities, and this qualifies as capital expenditure.
Test: Public Expenditure - Question 2
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Which of the following types of public expenditure is associated with the improvement of productive capacity and growth activities of the government?

Detailed Solution for Test: Public Expenditure - Question 2
Plan expenditure is related to the government's planned development programs and includes investments in areas like agriculture, power, communication, industry, and public utilities. These expenditures are aimed at enhancing the productive capacity of the nation.
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Test: Public Expenditure - Question 3
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How does a capital levy differ from traditional income tax?

Detailed Solution for Test: Public Expenditure - Question 3
A capital levy is a one-time tax on an individual's or business's total wealth (capital) rather than their annual income. It is collected once and can be used as a measure to raise revenue for the government, especially in times of financial crisis.
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What is the purpose of deficit financing?
Detailed Solution for Test: Public Expenditure - Question 4
Deficit financing refers to the practice of funding government expenditures through borrowing when government revenue falls short of expenditures. This helps the government meet its financial obligations and continue providing public services even in cases of budget deficits.
Test: Public Expenditure - Question 5
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Which canon of public expenditure emphasizes the need to spend money in a manner that promotes increased production, equitable distribution, and social welfare?
Detailed Solution for Test: Public Expenditure - Question 5
The Canon of Benefit emphasizes that public expenditure should lead to important social advantages such as increased production, equitable distribution, social justice, and maximum social welfare. It encourages government spending that benefits the community as a whole.
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How does a capital levy impact individuals or businesses with higher net worth?
Detailed Solution for Test: Public Expenditure - Question 6
A capital levy involves taxing individuals or businesses based on their total wealth (net worth) rather than their annual income. Those with higher net worth will pay a larger one-time tax amount, which can be a significant sum depending on their wealth.
Test: Public Expenditure - Question 7
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Which type of public expenditure focuses on growth and development activities, improving productive capacity, and enhancing various sectors?
Detailed Solution for Test: Public Expenditure - Question 7
Development productive expenditure refers to government spending on activities that lead to growth and development, such as investments in education, health, industry, agriculture, transport, and infrastructure. These expenditures aim to improve the productive capacity of the nation.
Test: Public Expenditure - Question 8
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How does a capital levy differ from a traditional income tax in terms of frequency of collection?
Detailed Solution for Test: Public Expenditure - Question 8
A capital levy is collected once as a one-time tax on an individual's or business's total wealth. In contrast, traditional income tax is collected annually based on an individual's income earned during the year.
Test: Public Expenditure - Question 9
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What effect does public expenditure have on consumption in an economy?
Detailed Solution for Test: Public Expenditure - Question 9
Public expenditure, especially on welfare programs, can enhance the capacity of the poorer sections of society to consume. This increased consumption, in turn, contributes to economic activities and growth.
Test: Public Expenditure - Question 10
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How does deficit financing contribute to economic stability?
Detailed Solution for Test: Public Expenditure - Question 10
Deficit financing can help control economic instability by adjusting the money supply. During periods of recession or deflation, the government can increase spending through deficit financing, which injects money into the economy and boosts demand. Conversely, during periods of inflation, reducing government spending through deficit financing can help control the money supply and stabilize prices.
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Important Questions for Public Expenditure

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Public Expenditure MCQs with Answers

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