Public Finance

Question 1

What is meant by public finance?

Answer 1

Meaning of Public Finance: Public finance is that branch of economics, which deals with revenue and its expenditures. the revenue and expenditures of the government. It studies the resources of government’s

Question 2

Define public finance in the words of Bastable?

Answer 2

Public finance is that branch of economies which studies the revenue and expenditures of government’s institutions, their interrelationship and financial administration.

Question 3

Define public finance in the words of Prof Armitage Smith?
public finance.

Answer 3

The study of nature and principles of government’s expenditure and revenue is called

Question 4

Define public finance in the words of Prof Dalton?

Answer 4

Public finance deals with government’s revenue and expenditure and it studies how government maintains balance between its revenue and expenditure.

Question 5

Define canon of taxation “canon of convenience” according to Prof Adam Smith.

Answer 5

According to Prof Adam Smith tax should be levied on the time when the taxpayer can easily pay it. Therefore it is necessary that tax should be collected in installment and at the time when tax payers get their incomes or salaries.

Question 6

Write the four basic canons of taxation stated by Prof Adam Smith?

Answer 6

Prof Adam Smith has stated the following four basic canons of taxation.
(1)
Canon of equality.
(2)
Canon of certainity.
(3)
Canon of convenience.
(4)
Canon of economy.

Question 7

What is meant by direct tax?

Answer 7

Meaning of Direct Tax: Direct tax means the tax which is paid from the pocket of the person on when it is levied. It means the incidence (final burden) and impact (initial money burden) of the tax is on the same person. Income tax, property tax and wealth tax are the examples of this kind of tax.

Question 8

What is meant by indirect tax?

Answer 8

meaning of Indirect tax: Indirect tax means the tax which is not paid from the pocket on when it is levied. Rather the burden of the tax is shifted to another person. For example sales tax, custom duty and excise duty etc. The entrepreneurs and traders pay these taxes for the time being but they include the amount of this tax in the prices of goods and receive from the buyers.

Question 9

What is meant hy progressive tax?

Answer 9

Moaning Hogerie lee axi Wiel ate of ta. incrests with the increase of level or income is called progressive rax. lul’ansten meet is porsemer

Question 10

What is meant by proportional tax?

Answer 10

Meaning of Proportional Tar ax in which the rate of tax remains the same on eve
ARS:
level of income is called proportional tax.

Question 11

What is meant by regressive tax?

Question 12

What is meant by value added tax (VAT)?

Answer 12

Neining of Value added tax: This is a kind of tax which is imposed on every stage production of goed. For example VAT for a bread, will be reccived first from farmer whear, then atter grinding when it becomes flour but on the difference of value betwe wheat and flour, then after baking the bread, on the difference of value between four a bread and finally the retail seller on selling the bread.

Question 13

What is meant by Zakat?

Answer 13

Meaning of Zakat: The meaning of zakat is purification and growth. Zakat purifies wealth from which the fixed amount of zakat is paid. The person who pays zakat, his wea grows by the blessing and favour of Allah.

Question 14

Define Zakat in religious term?

Answer 14

Zakat is a compulsory payment on a sahib-e-nisab Muslim. He pays it as a religious d at a given rate on open and secret wealth himself or through Islamic state to the deserv people.

Question 15

Who are the beneficiaries of Zakat?

Answer 15

According to Quran-e-Hakeem there are eight beneficiaries of Zakat.
(1)
The Poor.
(2)
The Needy.
(3)
The newly converts to Islam.
(4)
For the freedom of slaves.
(5)
Debtors.
•(6)
The collectors.of Zakat.
(7)
The needy travellers.
(8)
- For the cause of Allah.

Question 16

What are the parts of public finance?
Ans:

Answer 16

There are three parts of publie finance.
(1)
Public revenue.
(2)
(3)
Public expenditures.
Public debt.

Question 17

What canons a government takes into account while levying tax? Or What are canons of taxation?
Ans:

Answer 17

Following are canons of Taxation:
(1)
Canon of equality
(2)
Canon of certainity.
(3)
(4)
Canon of convenience.
Canon of economy.
(5).
Canon of productivity.

Question 18

What canons a government takes into account while levying tax? Or What are canons of taxation?
Ans:

Answer 18

Following are canons of Taxation:
(1)
Canon of equality
(2)
Canon of certainity.
(3)
(4)
Canon of convenience.
Canon of economy.
(5).
Canon of productivity.

Canon of simplicity.
(7)
Canon of Elasticity.
(8)
Canon of economic development.
(9)
Canon of diversity.

Question 19

What is meant by Private finance?

Answer 19

expenditure and their related principles is called private finance.
Meaning of Private Finance: The study of private fire of a individual’s income

Question 20

Define canon of taxation “canon of equality” according to Prof Adam Smith?

Answer 20

Canon of equality means that all the individuals should pay fax in accordance with their incomes. This canon of equality does not mean that every individual should pay equal tav equally sacrifice for public finance. It is only possible when the rich pay tax at the higher oreal sacrical should pay tar wih the same fate. I fact, it means every body should rate than the poor.

Question 21

Differentiate between the incidence of tax and the impact of tax?

Answer 21

Difference between incidence of tax and impact of tax: Impact of the tax means the government receives the tax from the person on whom the tax is imposed while incidence means the burden of the tax. Because it is not necessary that the burden of the tax is on the same person on when tax is imposed.

Alright! Let’s say there’s a candy shop.
1. Impact of Tax:
The government tells the shopkeeper, “You need to pay a tax for every candy you sell.” So, the shopkeeper is the one who has to pay the tax to the government.
2. Incidence of Tax:
But the shopkeeper doesn’t want to lose money. So, he increases the candy price. Now, you (the customer) end up paying more for the candy. This means you are the one who actually feels the tax in the end.

In short:
• The impact is on the shopkeeper because the government asks them to pay.
• The incidence is on you because you’re the one who really pays when the candy price goes up!

Does that make sense?

Question 22

What are different kinds of taxes?

Answer 22

The following are kinds of taxes.
(1)
Direct tax.
(3)
(2)
Proportional tax.
Indirect tax.
0.22:
(5)
Regressive tax.
(4)
Progressive tax.
Ans:

Question 23

What is meant by budget?

Answer 23

Meaning of budget: Account of income and expenditure is called budget.

For a KG Student:

A budget is like a plan for your money. Imagine you have 10 candies, but you need to save some to share with your friends and buy stickers. A budget helps you decide how many candies to spend, save, or share so you don’t run out!

For an Adult (in easy words):

A budget is a plan that helps you manage your money. It shows how much money you earn, how much you need to spend, and how much you can save. It’s like a guide to make sure you don’t spend more than you have and can save for important things.

Question 24

What is meant by surplus budget?

Answer 24

Meaning of surplus budget: When the revenue of the government is more then is
expenditures, then it is called surplus budget.
Q.24:

Question 25

What is meant by Deficit budget?
Ans:
Q.25:

A

Answer 25

Meaning of deficit budget: When the revenues of the government are less than its expenditures then it is called deficit budget.
Ans:

Question 26

What is meant by Balanced Budget?
Q.26:

Ans:
.

Answer 26

Meaning of Balanced Budget: When the revenues of the government are equal to its expenditures then it is called balanced budget.

Question 27

What is meant by Fee?
0.27:
Ans:

Answer 27

money in return for these services, it is called fee.
Meaning of Fee: The government provides some direct services to the people and charges

Question 28

Differentiate between Fee and Tax?
0.28:

Answer 28

Difference between Fee and Tax: Fee is the reward of the government’s services from
Ans:
which the people are benefited, while the tax payer can not demand for direct personal benefit from the government in return for payment of tax.

Question 29

What is meant by Tax?

Answer 29

Meaning of Tax: Tax is a compulsory payment made by the people to government treasury to meet the expenditure of the government, for the common henefit of the pole, There are two characteristics of tax.

Fist ax is a compulsory payment made by the people. tis illegal and punishable to refuse
payment of tax.
Second Y
The amount of money colleted from taxes is spent on social welfare. A tax payer cannon demand for a direct personal benefit from the government in retum for payment of tax.

Question 30

Differentiate between public finance and private finance?

Answer 30

Difference between Public Finance and Private Finance: The study of government’s revenue, expenditure and their principles is called public finance, Where as, the study or the nature of an individual’s income, expenditure and their related principles is called private finance.

Question 31

Write four points of similarities between public finance and private finance?
Q.30:
Ans.

Answer 31

Following are four points of Similarities between public finance and Private finance:
(1)
Balance between income and expenditure.
(2)
• Maximum utilization of scarce means.
(3)
Need of loans.
(4)
Increase in income trough investment.

Question 32

Write four differences between public finance and private finance?
Ans:

Answer 32

Following are four differences between public finance and private finance:
Difference in Adjustment of income and expenditure.
(2) : Difference in budget period.
Private budget is kept secret while public budget is announced.
Individuals can lend/only from the internal resources while the government can lend both from internal, external resources and international financial agencies.
Q.32:

Question 33

Write four main sources of public revenue?
Ans:

Answer 33

Following are four main sources of public revenue:
(1) Taxes.
-(2) Fee.
• (3) Price.
(4) Special assessment.

Fines

Gifts and aids

Receipt of loan and internet

Govt property

Productive work of govt

Local rates

Properties of heirless

Question 34

Write four heads of public expenditure?.
Following are four heads of public expenditure:
(1)
Q.34:
Ans:

Answer 34

Defense
.
(2) Police.

Civil Administration:

Courts:

Public Health:
(5) -

Public Education:

Means of Transport:
(8)
Irrigation:

(9)
Interest on Loans:

(10)
Subsidies:

(12)
Social Welfare:

Question 35

Write four points of importance of Zakat.

Answer 35

Following are four points of importance of Zakat:
(1)
Fair distribution of wealth.
(2)
Remedy to unemployment.
(3)
Remedy to poverty.
(4)
Remedy to concentration of wealth.
Q.35:
Ans:.

Question 36

Write four points of difference between Zakat and tax?

Answer 36

Following are four points of difference between Zakat and tax:
(1)
Difference in objectives: Difference in objectives of zakat and tax.
(2)
Exemption: No exemption in the payment of zakat at all while govemment may exempt the tax.
(3)
Rate: Rate of zakat is fixed for ever while the government keeps on changing the rate of tax according to the circumstances.
(4)
Personally or through state: Zakat may be paid either personally or through stale while tax is always paid to the government