Practice test

Budget and taxation - Test Set 4

Review 20 exam-focused questions with detailed explanations, then start the interactive test when you are ready.

20 questions

Questions and explanations

  1. Question 1

    The Government ___ is a statement of expected receipts and expected of the Government (for the coming fiscal year) that reveals the budgetary policy of the Government to achieve the twin objective of growth and stability.
    1. Policy
    2. Budget
    3. Plan
    4. Revenue
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  2. Question 2

    ______ is an item for which both, GST and central excise duty are applicable in India.
    1. Alcohol for human consumption
    2. Tobacco and tobacco products
    3. Petroleum products
    4. All the agricultural commodities
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  3. Question 3

    Usually, the reduction in the taxes will have ______ multiplier effect compared to an increase in government spending on aggregate demand.
    1. No
    2. Smaller
    3. Higher
    4. Equivalent
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  4. Question 4

    Proportional taxes would help to reduce the autonomous expenditure multiplier because ______.
    1. Axes increase the MPC
    2. MPC does not have any role in it
    3. Axes and MPC become equal
    4. Taxes reduce the MPC
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  5. Question 5

    Which of the following is an example of direct tax?
    1. Escheat
    2. Income Tax
    3. Custom Duty
    4. Goods and Services Tax
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  6. Question 6

    Match List I with List II and choose your answer from the code below:
    List - I
    i. Service tax
    ii. Interest receipt
    iii. Sale of shares of PSUs
    iv. Salaries and pension
    List - II
    a. Capital receipt
    b. Revenue expenditure
    c. Non-tax revenue
    d. Tax Revenue
    1. i-d, ii-c, iii-b, iv-a
    2. i-c, ii-b, iii-a, iv-d
    3. i-d, ii-c, iii-a, iv-b
    4. i-d, ii-a, iii-c, iv-b
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  7. Question 7

    If the tax rate increases with the taxable base, then this type of taxation is called:
    1. Progressive
    2. Regressive
    3. Proportional
    4. Digressive
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  8. Question 8

    Non-Tax revenue is part of ______.
    1. Revenue Expenditure
    2. Revenue Receipts
    3. Capital Expenditure
    4. Capital Receipts
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  9. Question 9

    Which type of tax acts as an automatic stabilizer in the economy?
    1. Professional tax
    2. Wealth tax
    3. Capital gains tax
    4. Proportional income tax
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  10. Question 10

    Duties levied on goods produced within the country are ______.
    1. Anti-dumping taxes
    2. Excise taxes
    3. Custom duties
    4. Wealth taxes
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  11. Question 11

    When was the Direct Tax Code Bill introduced in the Parliament of India?
    1. 2010
    2. 2005
    3. 2020
    4. 2015
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  12. Question 12

    When tax collection exceeds the required expenditure, the budget is said to be in ______.
    1. Deficit
    2. Surplus
    3. Economic spread
    4. Balance
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  13. Question 13

    Which of the following commodities are exempted from GST?
    1. Hand sanitisers
    2. Pens
    3. Alcohol for human consumption
    4. Ventilators
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  14. Question 14

    The tax imposed on goods imported into and exported out of India is called ______.
    1. Corporation tax
    2. Excise tax
    3. Capital gain tax
    4. Custom duty
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  15. Question 15

    _____ is a tax system that collects a greater share of income from those with high incomes than from those with lower incomes.
    1. Proportional tax
    2. Regressive tax
    3. Payroll tax
    4. Progressive tax
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  16. Question 16

    Which of the following is an example of a non-tax revenue source for the government?
    1. Value-added tax
    2. Personal income tax
    3. Corporate Income tax
    4. Fees and fines
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  17. Question 17

    Section 56 (2) (vii b) in the Income Tax Act is referred to as:
    1. Normal Investments
    2. Angel Fund
    3. Normal Equity
    4. Angel Tax
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  18. Question 18

    According to David Ricardo, during a high deficit situation taxation and borrowings are ______ means of spending.
    1. Product
    2. Differentiated
    3. Equivalent
    4. Subsidised
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  19. Question 19

    Which of the following is a source of tax revenue?
    1. Profit
    2. Customs
    3. Grants
    4. Penalties
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  20. Question 20

    In which type of tax is the marginal tax rate higher than the average tax rate?
    1. Proportional
    2. Regressive
    3. Digressive
    4. Progressive
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