Test: Public Finance -1 - JAMB MCQ

The main objective of public finance is to ensure the efficient allocation of resources in the economy. This involves determining how resources should be distributed among different sectors and activities to maximize social welfare.

Fiscal policy refers to the use of government spending and taxation to influence the economy. The tax rate is an important instrument used in fiscal policy to affect the level of economic activity, investment, and consumption.

Direct taxes are levied directly on individuals or entities and cannot be transferred to others. Corporate income tax is a direct tax imposed on the income of companies.

Royalties are payments made to the government for the use of natural resources such as oil, gas, or minerals. These payments are typically made by companies that extract or exploit these resources.

Grants and aids received by the government are classified as current transfers. Current transfers involve the transfer of funds between different sectors of the economy without any corresponding goods or services being provided in return.

Indirect taxes are taxes levied on the consumption or spending of goods and services. Sales tax is an example of an indirect tax as it is imposed on the sale of goods and services.

The primary objective of fiscal policy is to stabilize the economy by managing government spending and taxation. It aims to control aggregate demand, stabilize price levels, and promote economic growth and stability.

Fiscal policy and monetary policy are two distinct tools used to manage the economy. While fiscal policy involves government spending and taxation, monetary policy is the responsibility of the central bank and involves controlling the money supply and interest rates.

Rents are a source of government revenue derived from the ownership or leasing of land or property. Governments can generate income by charging rent for the use of state-owned land or properties.

Non-tax revenue refers to government revenue generated from sources other than taxes. Dividends from state-owned enterprises represent income earned by the government through its ownership of certain companies and are considered non-tax revenue.