Public finance - Exam
  • 1. Public finance is the study of the role of the government in the economy. It encompasses all activities related to the collection of revenue through taxes and other means, as well as the allocation of funds for public services and goods. Public finance also involves budgeting, spending, borrowing, and managing the financial resources of the government. It aims to ensure that public funds are used efficiently and effectively to promote economic growth, social welfare, and overall prosperity for the society.

    What is the purpose of public expenditure?
A) Reducing competition
B) Provision of public goods and services
C) Generating revenue
D) Maximizing profit
  • 2. Which of the following is an example of a regressive tax?
A) Property tax
B) Income tax
C) Sales tax
D) Progressive tax
  • 3. What is the role of the budget deficit in public finance?
A) Balancing the budget annually
B) When government saves surplus revenue
C) When government spending exceeds revenue
D) Generating additional revenue
  • 4. What is the Laffer curve used to illustrate in public finance?
A) Relationship between tax rates and government revenue
B) Inflationary pressures
C) Interest rate fluctuations
D) Foreign aid expenditure
  • 5. What are the components of a government budget?
A) Revenue, expenditure, and deficit/surplus
B) Corporate profits, expenses, and dividends
C) Stock market indices, exchange rates, and bond yields
D) Gross domestic product, inflation rate, and employment rate
  • 6. What is the purpose of an excise duty?
A) Tax on income
B) Tax on specific goods like alcohol and tobacco
C) Tax on imports
D) Tax on property ownership
  • 7. What is the role of the principle of subsidiarity in public finance?
A) Privatization of public services
B) Centralization of public services under one government agency
C) Decentralization of public services to the lowest level of government
D) Globalization of public services
  • 8. What is the purpose of a capital gains tax?
A) Tax on property ownership
B) Tax on goods and services
C) Tax on profit from the sale of assets
D) Tax on income from employment
  • 9. What is the difference between tax evasion and tax avoidance?
A) Tax evasion is for corporations, tax avoidance is for individuals
B) Tax evasion is illegal, tax avoidance is legal
C) Tax evasion is avoiding taxes, tax avoidance is delaying taxes
D) Tax evasion is by wealthy people, tax avoidance is by middle class
  • 10. What is the role of the International Monetary Fund (IMF) in public finance?
A) Providing financial assistance and policy advice to countries
B) Issuing currency
C) Managing national budgets
D) Regulating global trade agreements
  • 11. Why is it important for governments to have a stable and predictable tax system?
A) Encourages tax evasion
B) Increases government spending
C) Leads to budget deficits
D) Promotes economic growth and investment
  • 12. What is the significance of the government's budget formulation process?
A) Leads to inflation
B) Increases government debt
C) Sets out government priorities and resource allocation
D) Promotes tax evasion
  • 13. What is the impact of government spending on economic growth?
A) Increases taxes
B) Reduces competition
C) Leads to lower inflation
D) Can stimulate economic activity and employment
  • 14. What is the concept of intergenerational equity in public finance?
A) Encouraging wealth accumulation for future generations.
B) Ensuring current generations do not burden future generations with excessive debt.
C) Tax breaks for young individuals.
D) Giving higher priority to the welfare of older generations.
Created with That Quiz — the math test generation site with resources for other subject areas.