MCQ For Sem 3 Unit 1 & 2

MCQ’s for the subject of Public Finance
Sem-3 JPS SIR

1. Which of the following is a union tax?
a. Corporation tax b. Taxes on agricultural income

c. Capitation taxes d. Land revenues
2. Which of the following is not a union tax?
a. Taxes on railway freights and fares b. Stamp duties on financial documents

c. Tolls d. A and b only
3. The tax levied by the union government on income of individuals is known as
a. Personal income tax b. Interest tax

c. Wealth tax d. Corporation tax
4. The tax on net income of companies is
a. Personal income tax b. Interest tax

c. Wealth tax d. Corporation tax
5. The most important source of revenue to the states is
a. Sales tax b. Service tax

c. Excise duty d. None of the above
6. Pension of the retired employees of the government is included in …….
a..Capital Expenditure b. Revenue Expenditure

c. Investment Expenditure d. Social Expenditure
7. To prepare a deficit budget, taxes should be ……….
a. Redused b. Increased
c. Changed d. Kept Steady
8. Tax payment is ……….
a. Voluntary b. Compulsory
c. Deferred d. Illegal
9. What number of types taxes are there according to incidence…………
a. Two b. Three c. Four d. Five
10. Types of taxes according to tax rate.
a. Two b. Three c. Four d. Five
11. To reduce tax burden through tax planning is ………
a. Tax Evasion b. Tax Incidence

c. Tax Avoidance d. Tax Shifting
12. Under which situation, deficit budget is desirable?
a. Depression b. Boom c. Inflation d. Prosperity
13. If the impact and incidence are on different persons, the tax is called…..
a. Progressive b. Direct c. Indirect d. Proportionate
14. Excise duty on T. V. sets is an example of ………
a. Indirect tax b. Direct tax c. Progressive d. Proportionate tax
15. Public Finance relates to Finance of ……
a. An individual b. Pubic Authority c. Business man d. Traders
16. Which is not the subject matter of public finance.
a. Public Revenue b. Public Expenditure c. Public Debt d. Private Finance
17. _____________ finance aims at profit motive.
a. Private b. Public c. Central Government d. State Government

18. ____________ Expenditure is always pre-sanctioned.
a. Private b. Family c. An Individual d. Public
19. In India the Budget is presented by _____________.
a. The President b. The Prime Minister c. The Finance Minister d. Governer
20. ____________ is the major source of Public Revenue.
a. Special Assessment b. Tax c. Price d. Fee
21. A budget in which anticipated Revenue and proposed expenditure are unequal.
a. Balanced b. Deficit c. Surplus d. None
22. Payment made for the purpose of getting education is __________.
a. Tax b. Fees c. Price d. Special Assessment
23. Taxes are ___________.
a. Voluntary b. Compulsory c. Optional d. None
24. _____________ taxes are progressive.
a. Direct b. Indirect c. Ad Valorem d. Specific
25. _________ taxes are regressive in nature
a. Direct b. Indirect c. Proportional d. Equal
26. ______________ taxes are elastic.
a. Direct b. Indirect c. Sales d. VAT
27. ____________ taxes can be legally shifted.
a. Direct b. Indirect c. Both a & b d. None
28. Which is the example of Indirect Tax?
a. Wealth tax b. Income tax c. Excise Duty d. Corporation tax

29. Progressive Tax system helps to reduce _____________.
a. Standard of living b. Supply of goods c. Inequality of income d. None
30. ______________ is the example of Direct Tax.
a. Corporation Tax b. Sales Tax c. Import Duty d. Excise Duty
31. GST refers to _____________.
a. Garib Sarkar Tax b. Gabbar Sing Tax c. Goods and Services Tax d. None
32.
33.
34.
35.
36.
37.
Indian Economy –
Unit 1 National Income
Unit 3 Inequality and concentration of economic power

1. The financial year in India is
a. April 1 to March 31
b. January 1 to December 31
c. March 1 to April 30
d. March 16 to March 15
2. Consider the following statements and identify the right ones.
i. National income is the monetary value of all final goods and services produced.
ii. Depreciation is deducted from gross value to get the net value
a. I only
b. ii only
c. both
d. none
i. While calculating GDP, income generated by foreigners in a country is taken into

consideration
ii. While calculating GDP, income generated by nationals of a country outside the
country is taken into account
a. I only
b. ii only
c. both
d. none
4. The net value of GDP after deducting depreciation from GDP is
a. Net national product

b. Net domestic product
c. Gross national product
d. Disposable income
7. The value of NNP at consumer point is
a. NNP at factor cost

b. NNP at market price
c. GNP at market price
d. GNP at factor cost
9. The value of national income adjusted for inflation is called
a. Per capita income

b. Disposable income
c. Inflation rate
d. Real national income
10. The average income of the country is
a. Per capita income

b. Disposable income
c. Inflation rate
d. Real national income
i. Personal income refers to the income of individuals of a country.

ii. The income at their disposal after paying direct taxes is called disposable income
a. I only
b. ii only
c. both
d. none
12. Which of the following method/s is/are used to calculate national income in India?
a. Production method
b. Expenditure method
c. Income method
d. All the above
13. The national income estimation is the responsibility of
a. NSSO
b. CSO
c. Finance Ministry
d. National Income Committee
i. CSO is a premier statistical institution for collecting data in India

ii. It presents the national income estimates twice a year.
a. I only
b. ii only
c. both
d. none
15. As per the CSO classification, which of the following does not fall under the industrial
sector?
a. Construction
b. Manufacturing
c. Fisheries
d. Mining
16. As per the CSO classification, which of the following does not fall under finance and
real estate category?
a. Banking
b. Construction
c. Insurance
d. Real estate
17. As per the CSO classification, which of the following does not fall under industrial
sector?
a. Electricity
b. gas and water supply
c. transport and communication
d. manufacturing
i. The data for NI and PCI are collected at current prices.

ii. They are deflated using the deflator index to get value at constant prices.
a. I only
b. ii only
c. both
d. none
19. The most appropriate measure of a country's economic growth is
a. GDP
b. NDP
c. Per capita real income
d. GNP
20. which among the following is not among the top 4 organizations out of top 20 asset
holding industries of India up to 1989-90.
a. Larsen & Toubro

b. Reliance
c. Birla
d. Tata
21. When was the MRTP Act brought in to action?

a. 1971 b. 1972 c. 1973 d. None
22. What is the full form of ESCAP?

a. European Commission for Asia and the Pacific
b. Economic Concession for Asia and the Pacific
c. Economic Commission for Asia and the Pacific
d. None
23. National Council of Applied Economic Research (NCAER) made a study entitled “The
Great Indian Middle Class” in which year______.
a. 2004 b. 2006 c. 2008 d. None
24. As per 2010-11 norms defined by NCAER 2013 for middle class household with tha
annual household income of Rs.112000 to 250000 were called as_________.
a. Rich b. Deprived c. Aspirers d. Middle
25. Two companies that are in direct competition and share the same product lines and
markets are called
a. Horizontal Merger b. Congeneric Merger c. Vertical Merger d. None

Socio-economic aspects - Population - MCQs with answers -
Part 1
1. The author of the book An Essay on Principles of Population is
a. Malthus
b. James Princep
c. Keynes
d. Frank Notenstein
View Answer / Hide Answer
ANSWER: a. Malthus
The theory of population is given by Malthus in this book. Frank Notenstein gave the
theory of demographic transition.
i. According to the Malthusian theory, supply of food grains increase in geometric

progression
ii. The population grows in arithmetic progression.
a. I only
b. ii only
c. both
d. none
ANSWER: d. none
According to the Malthusian theory, supply of food grains increase in arithmetic

progression. The population grows in geometric progression.
i. Malthus supported population control to ensure balance between population and

availability of food grains
ii. He advocated "unethical" means to control population
a. I only
b. ii only
c. both
d. none
ANSWER: a. I only
He advocated ethical means to control population like self control, late marriage etc.
he was against methods like abortion.
4. The theory that says the level of population at which per capita income is
maximum is
a. Theory of population by Malthus

b. Theory of optimum population
c. Theory of demographic transition
d. None of the below
ANSWER: b. Theory of optimum population
The theory that says the level of population at which per capita income is maximum
is the Theory of optimum population.
i. According to the theory of demographic transition, in the first stage, birth rate is low
but death rate is high
ii. The difference between them is high
a. I only
b. ii only
c. both
d. none
ANSWER: d. none
According to the theory of demographic transition, in the first stage, birth rate and
death rate both are high and the difference between them is quite low.
i. In the second stage of demographic transition, death rates declines.

ii. The difference between birth rate and death rate decreases
a. I only
b. ii only
c. both
d. none

ANSWER: a. I only
In the second stage, there is negligible decline in the birth rate. Hence the difference
between birth and death rate increases.
7. In which stage of demographic transition is the population growth rate

highest?
a. First
b. Second
c. Third
d. Fourth
ANSWER: b. Second
In the second stage, there is negligible decline in the birth rate. Hence the difference
between birth and death rate increases.
i. The third stage is the period of declining growth rates.

ii. The second stage of demographic transition witnesses population explosion
a. I only
b. ii only
c. both
d. none
ANSWER: c. both
In the third stage of demographic transition, the population growth rate declines at a
faster rate.
9. Match the following.

i. 1891-1921 ------------ a. period of stagnant population
ii. 1921-1951 ----------- b. period of steady growth
iii. 1951-1981 ---------- c. period of high growth
iv. 1981-2011 ----------- d. period of declining growth rate
a. Ia, iib, iiic, ivd

b. Ic, iib, iiia, ivd
c. Ib, iic, iiia, ivd
d. Ia, iib, iiid, ivc
ANSWER: a. Ia iib iiic ivd
This is the population trend in India from 1891 onwards. It has slowly moved towards
the declining growth rate period.
10. Arrange the birthrates of the states in the highest to lowest order.
a. UP, Bihar, Rajasthan, Karnataka

b. Bihar, UP, Rajasthan, Karnataka
c. UP, Rajasthan, Bihar, Karnataka
d. UP, Bihar, Karnataka, Rajasthan
ANSWER: a. UP, Bihar, Rajasthan, Karnataka
The birthrate of UP is the highest with 27.8 followed by Bihar with 27.7, MP with 26.9
Socio-economic aspects - Population - MCQs with answers -

Part 2
1. Arrange the death rates of the states in the highest to lowest order.
a. Odisha, UP, MP, Assam

b. Odisha, MP, Assam, UP
c. MP, Odisha, UP, Assam
d. UP,MP, Odisha, Assam
ANSWER: b. Odisha, MP, Assam, UP
Odisha has the highest death rate of 8.5, MP with 8.2, Assam with 8 and UP with 7.9
2. The state with lowest death rate is
a. West Bengal
b. Haryana
c. Bihar
d. Kerala
ANSWER: a. West Bengal
Kerala has the death rate of 7. West Bengal has the death rate of 6.2, Haryana with 6.5
and Bihar with 6.7
3. The state with lowest birth rate is
a. West Bengal
b. Kerala
c. Karnataka
d. Assam
ANSWER: b. Kerala
Kerala has the lowest birth rate of 15.2, West Bengal with 6.2, Karnataka with 7.1 and
Assam with 8.
4. Which five year plan stated the objective of stabilizing the population growth to
be the central feature of planning?
a. First
b. Second
c. Third
d. Fourth
ANSWER: c. Third
Family planning was adopted as a measure to stabilize the population growth.
5. The Department of Family Planning was set up in
a. 1965
b. 1966
c. 1977
d. 1975
ANSWER: b. 1966
From third five year plan onwards, importance was given to family planning
measures to stabilize the population growth.
i. Family planning was made target-oriented in the 1960s

ii. The period saw cafeteria approach
a. I only
b. ii only
c. both
d. none
ANSWER: c. both
From third five year plan onwards, importance was given to family planning
measures to stabilize the population growth.
i. The 4th five year plan aimed at reducing birth rate from 39 per thousand to 29 in next
10 years.
ii. There was emphasis on providing supplies and services.
a. I only
b. ii only
c. both
d. none
ANSWER: c. both
The 4th five year plan aimed at reducing birth rate from 39 per thousand to 29 in next
10 years.
i. The National Population Policy was announced in 1976.

ii. Prior to this policy, family planning was voluntary
a. I only
b. ii only
c. both
d. none
ANSWER: c. both
Prior to the 1976 Population policy, government was just acting as a facilitator and
family planning was a voluntary act.
i. the 2000 population policy has a long term objective of achieving a stable population
by 2015
ii. The National Population Policy aimed at achieving universal immunization of children
against all vaccine preventable diseases.
a. I only
b. ii only
c. both
d. none
ANSWER: b. ii only
The 2000 population policy has a long term objective of achieving a stable population
by 2045. The policy has immediate, medium term and long term goals.
10. Which of the following is/are immediate objective of the population policy of
2000?
a. meet the needs of contraception

b. meet the needs of health infrastructure
c. meet the needs of health personnel
d. all the above
ANSWER: d. all the above
Along with the above objectives, it also aims at providing integrated services for
basic reproductive and child health care.
Indian Economy - Growth and Development - MCQs with

answers - Part 1
1. Which of the following explains the term economic growth?
a. Increase in per capita production

b. Increase in per capita real income
c. structural change in the economy
d. all the above are right
ANSWER: d. all the above are right
There is no single definition that can define the term economic growth. However,
there are various indicators that explain the term.
2. Economic development is characterized by
a. Structural change in the economy

b. Change in the occupational structure
c. Both a and b
d. None of the above
ANSWER: c. Both a and b
The structural change is the shift from primary sector to secondary and tertiary
sectorsâ€™ contribution to the GDP. Change in occupational structure involves
falling share of agriculture in the total employment.
3. Which of the following explains the term economic development?
a. Improvement in the technology involved

b. Improvement in production
c. Improvement in distribution system
d. All the above
ANSWER: d. All the above
Economic development is a wider concept than growth. There are various

parameters used to define and measure it.
4. An underdeveloped economy is characterized by

a. High per capita real income
b. Large proportion of labor force in the tertiary sector
c. State of deprivation of large proportion of population
d. All the above
5. Scarcity of capital , technological backwardness and unemployment are

generally found in
a. Developed countries
b. Underdeveloped countries
c. Both
d. None of the above
ANSWER: b. Underdeveloped countries
Underdeveloped countries lag behind in various factors like availability of resources,

technology etc.
6. Which of the following denotes an underdeveloped economy?
a. High level of inequalities

b. Low level of capital productivity
c. A relatively closed economy
d. All the above
Other than the above features, there is High incidence of poverty, rapid population
growth and technological backwardness too.
7. Capital formation in underdeveloped countries is a major bottleneck. The

reason can be
a. Small size of market with no incentive for investment

b. Low level of income
c. Demonstration effect
d. All the above
Capital formation refers to investment in tools, machinery, buildings etc. inequalities

in the economy is also a reason behind this.
i. Higher level of capital-output ratio indicates efficient use of capital.
ii. It reflects the productivity of capital in the economy
a. I only
b. ii only
c. both
d. none
ANSWER: b. ii only
COR refers to the number of units of capital required to produce one unit of output. A
higher level of it means inefficient use of capital.
i. COR is relatively low in labour intensive sectors.

ii. COR will be high in capital intensive sectors
iii. Both
iv. None
ANSWER: iii. Both

It is high in capital intensive industries because of more use of capital and timelag
between investment and production.
10. Which of the following about strategy of balanced growth is right?
a. Simultaneous investment in all sectors

b. All sectors are independent.
c. Both
d. None
ANSWER: a. Simultaneous investment in all sectors
The supporters of this theory argue that simultaneous investment in all the sectors
will help in faster growth. It is based on the idea that all sectors are interlinked.
Indian Economy - Growth and Development - MCQs with

answers - Part 2
1. Which of the following about strategy of unbalanced growth is right?
a. Deliberate imbalance in favor of some sectors

b. Simultaneous investment in all sectors
c. Both
d. None
ANSWER: a. Deliberate imbalance in favor of some sectors
This strategy says that there will be positive impact on the sectors that are lagging
behind and they will also try to catch up with it.
i. Unbalanced growth strategy is also known as Mahalanobis strategy

ii. This strategy was adopted in India after the 7th five year plans.
a. I only
b. ii only
c. both
d. none
ANSWER: a. I only
India adopted this growth strategy after independence itself. The second five year
plan emphasized on the development of heavy industries.
3. The concept of PQLI was developed by
a. Morris D Morris
b. UNO
c. UNDP
d. Oxford Poverty and Human Development Initiative
ANSWER: a. Morris D Morris
Physical Quality of Life Index is one of the indicator to measure human development.
It is calculated by using simple average.
4. The parameter/s of the PQLI is/are
a. Life Expectancy Index

b. Standard of living index
c. Infant mortality rate
d. A and C
ANSWER: d. A and C
PQLI has 3 parameters- life expectancy index, infant mortality rate and basic literacy
index.
5. Consider the following statements and identify the right ones
i. The Oxford PHI publishes Human Development Report

ii. The HDR is published biennially.
a. I only
b. ii only
c. both
d. none
ANSWER: d. none
The United Nations Development Programme (UNDP) published the HDR every year
since 1990.
6. The concept of HDI was popularized by
a. Morris D Morris
b. Adam Smith
c. Keynes
d. Mahbub Ul Haq
ANSWER: d. Mahbub Ul Haq
The concept developed in the 1990s. It has 3 important parameters- life expectancy,
education achievement index and standard of living index.
7. The component/s of HDI is/are
a. Life expectancy index

b. Infant mortality rate
c. Population growth rate
d. All the above
ANSWER: a. Life expectancy index
The concept developed in the 1990s. It has 3 important parameters- life expectancy,
education achievement index and standard of living index.
8. The Multidimensional Poverty Index has been developed by
a. The UNDP
b. Oxford HDI
c. The UNO
d. Morris D Morris
ANSWER: b. Oxford HDI
The MPI concept is developed by the Oxford Human Development Initiative. It has
three main dimensions to it.
9. Which of following is not a component of MPI?
a. Health
b. Education
c. Occupation
d. Standard of living
ANSWER: c. Occupation
MPI has 3 important dimensions to it- health, education and standard of living. Based
on these , there are ten parameters.
i. Each indicator in educational dimesion is equally weighted at 1/6
ii. Each indicator in standard of living is equally weighted at 1/8
a. I only
b. ii only
c. both
d. none
ANSWER: a. I only
while education and health dimensions measure each indicators at equal weightage
of 1/6, for standard of living it is 1/18
Foreign trade - MCQs with answers
1. Which of the following is a part of capital account?
a. Private capital
b. Banking capital
c. Official capital
d. All the above
i. A double entry system of record of all economic transactions between the residents of
a country and rest of the world is called balance of trade
ii. All transactions related to goods, services or income are classified as capital account.
a. i only
b. ii only
c. both
d. none
ANSWER: d. none
A double entry system of record of all economic transactions between the residents
of a country and rest of the world is called balance of payments. All transactions
related to goods, services or income are classified as current account.
3. The investment in productive assets and participation in management as stake

holders in business enterprises is
a. FDI
b. FII
c. Balance of payment
d. SDR
ANSWER: a. FDI
The investment in productive assets and participation in management as stake

holders in business enterprises is foreign direct investment.
4. The portfolio investment by foreign institutional investors is called
a. FDI
b. FII
c. Balance of payment
d. SDR
ANSWER: b. FII
The portfolio investment by foreign institutional investors is called foreign

institutional investment.
i. India adopted LERMS in 1992
ii. In 1993, dual exchange rate system was replaced by a unified floating exchange rate.
a. i only
b. ii only
c. both
d. none
ANSWER: c. both
Liberalized Exchange Rate Management System was a dual exchange rate system in
which 40% of forex earnings were converted at official exchange rate and 60% at
market determined exchange rate.

MCQ For Sem 3 Unit 1 & 2

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MCQ’s for the subject of Public Finance

Sem-3 JPS SIR

a. Corporation tax b. Taxes on agricultural income

2. Which of the following is not a union tax?

a. Taxes on railway freights and fares b. Stamp duties on financial documents

3. The tax levied by the union government on income of individuals is known as

a. Personal income tax b. Interest tax

4. The tax on net income of companies is

a. Personal income tax b. Interest tax

5. The most important source of revenue to the states is

a. Sales tax b. Service tax

6. Pension of the retired employees of the government is included in …….

a..Capital Expenditure b. Revenue Expenditure

7. To prepare a deficit budget, taxes should be ……….

9. What number of types taxes are there according to incidence…………

a. Two b. Three c. Four d. Five

10. Types of taxes according to tax rate.

a. Two b. Three c. Four d. Five

11. To reduce tax burden through tax planning is ………

a. Tax Evasion b. Tax Incidence

12. Under which situation, deficit budget is desirable?

a. Depression b. Boom c. Inflation d. Prosperity

a. Progressive b. Direct c. Indirect d. Proportionate

14. Excise duty on T. V. sets is an example of ………

a. Indirect tax b. Direct tax c. Progressive d. Proportionate tax

15. Public Finance relates to Finance of ……

a. An individual b. Pubic Authority c. Business man d. Traders

16. Which is not the subject matter of public finance.

a. Public Revenue b. Public Expenditure c. Public Debt d. Private Finance

17. _____________ finance aims at profit motive.

a. Private b. Public c. Central Government d. State Government

a. Private b. Family c. An Individual d. Public

19. In India the Budget is presented by _____________.

a. The President b. The Prime Minister c. The Finance Minister d. Governer

20. ____________ is the major source of Public Revenue.

a. Special Assessment b. Tax c. Price d. Fee

a. Balanced b. Deficit c. Surplus d. None

22. Payment made for the purpose of getting education is __________.

a. Tax b. Fees c. Price d. Special Assessment

23. Taxes are ___________.

a. Voluntary b. Compulsory c. Optional d. None

24. _____________ taxes are progressive.

a. Direct b. Indirect c. Ad Valorem d. Specific

25. _________ taxes are regressive in nature

a. Direct b. Indirect c. Proportional d. Equal

26. ______________ taxes are elastic.

a. Direct b. Indirect c. Sales d. VAT

27. ____________ taxes can be legally shifted.

a. Direct b. Indirect c. Both a & b d. None

28. Which is the example of Indirect Tax?

a. Wealth tax b. Income tax c. Excise Duty d. Corporation tax

a. Standard of living b. Supply of goods c. Inequality of income d. None

30. ______________ is the example of Direct Tax.

a. Corporation Tax b. Sales Tax c. Import Duty d. Excise Duty

31. GST refers to _____________.

Unit 1 National Income

Unit 3 Inequality and concentration of economic power

2. Consider the following statements and identify the right ones.

3. Consider the following statements and identify the right ones.

i. While calculating GDP, income generated by foreigners in a country is taken into

4. The net value of GDP after deducting depreciation from GDP is

a. Net national product

a. NNP at factor cost