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Chapters
1: Microeconomics and Macroeconomics: Introduction
2: Demand and Law of Demand
3: Theory of Consumer Behaviour: Marginal Utility and Indifference Curve Analysis
4: Elasticity of Demand
5: Supply - Law of Supply and Price Elasticity of Supply
6: Market Mechanism: Equilibrium Price and Quantity in a Competitive Market
7: Laws of Returns - Returns to a Factor and Returns to Scale
8: Cost and Revenue Analysis
9: Forms of Market
10: Producer's Equilibrium
11: Determination of Equilibrium Price and Output Under Perfect Competition
SECTION 2: THEORY OF INCOME AND EMPLOYMENT
12: Theory of Income and Employment
SECTION 3: MONEY AND BANKING
13: Money: Meaning and Functions
14: Banks: Commercial Bank and Central Bank
SECTION 4: BALANCE OF PAYMENTS AND EXCHANGE RATE
15: Balance of Payments and Exchange Rate
SECTION 5: PUBLIC FINANCE
▶ 16: Fiscal Policy
17: Government Budget
SECTION 6: NATIONAL INCOME
18: National Income and Circular Flow of Income
19: National Income Aggregates
20: Methods of Measuring National Income
SECTION 7: PROJECT WORK
21: Project Work
22: Model Short Answer Questions
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Solutions for Chapter 16: Fiscal Policy
Below listed, you can find solutions for Chapter 16 of CISCE Frank for इकॉनॉमिक्स [इंग्रजी] इयत्ता १२ आईएससी.
Frank solutions for इकॉनॉमिक्स [इंग्रजी] इयत्ता १२ आईएससी 16 Fiscal Policy TEST YOURSELF QUESTIONS [Pages 348 - 352]
Select the correct option for each of the following questions: (1 mark each)
Which of these are fiscal policy instruments?
taxation
public expenditure
public borrowing
all of these
Which of the following is a direct tax?
Excise duty
GST
Income tax
Custom duty
Which of the following is an indirect tax?
GST
Wealth tax
Income tax
Corporation tax
The type of tax, the impact of which lies on the same person on whom it is legally imposed is known as ______.
Indirect tax
Direct tax
Value added tax
None of these
A tax, the burden of which can be shifted to others, is called ______.
indirect tax
direct tax
wealth tax
none of these
A progressive tax is the one ______.
when the rate of taxation remains the same
when the rate of taxation increases
when the rater of taxation decreases
none of these
Indian tax structure can be broadly described as ______.
progressive
proportional
regressive
degressive
Regressive tax is the form of tax in which ______.
the rate decreases as the taxpayer’s income increases
the rate increases with increase in income
the rate remains same with increase in income
the rate increases initially and decreases subsequently with increase in income
Which of these public expenditure is not a ‘transfer expenditure’?
old-age pension
interest paid on government debt
expenditure incurred on defence
expenditure incurred in providing sickness benefit to the government employees.
Which of these are the methods of redemption of public debt?
debt conversion
terminal annuities
sinking fund
all of these
Deficit financing to meet the excess expenditure by the government leads to ______.
an increase in the supply of money
inflationary rise in prices
undesirable effect on distribution of income
all of these
Choose the correct pair of items from the statements given in Column I and Column II.
| Column I | Column II |
| A. GST | 1. Direct Tax |
| B. Income Tax | 2. Indirect Tax |
| C. Incidence of Tax | 3. Burden of the tax on a person who pays it to the government in the first instance |
| D. Impact of Tax | 4. Burden of the tax on a person who ultimately pays it |
A - 2, B - 1, C - 3, D - 4
A - 1, B - 2, C - 3, D - 4
A - 2, B - 1, C - 4, D - 3
A - 4, B - 3, C - 2, D - 1
Choose the correct pair of items from the statements given in Column I and Column II.
| Column I | Column II |
| A. Direct Expenditure | 1. Government expenditure on the payment of old-age pension |
| B. Transfer Expenditure | 2. Government expenditure on the purchase of goods and services |
| C. Regressive Tax | 3. The rate of tax increases with increase in income |
| D. Progressive Tax | 4. The rate of tax decreases with increase in income |
A - 2, B - 1, C - 4, D - 3
A - 1, B - 2, C - 3, D - 4
A - 2, B - 1, C - 3, D - 4
A - 1, B - 2, C - 4, D - 3
Match the correct pair of items from the items given in Column I and Column II.
| Column I | Column II |
|---|---|
| A. Sinking Fund | 1. Payment of old-age pension |
| B. Deficit Financing | 2. Policy of reducing government expenditure and increasing government revenue |
| C. Contractionary Fiscal Policy | 3. Meeting the deficit between government expenditure and revenue through creation of new money |
| D. Transfer Expenditure | 4. Method of debt redemption |
A - 1, B - 2, C - 3, D - 4
A - 4, B - 3, C - 1, D - 2
A - 3, B - 4, C - 2, D - 1
A - 4, B - 3, C - 2, D - 1
Given below are two statements marked as Assertion (A) and Reason (R). Read the statements carefully and choose the correct option.
Assertion (A): Progressive taxation is universally accepted as an ideal tax system.
Reason (R): It helps in reducing inequalities of income and wealth.
Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
Assertion (A) is true, but Reason (R) is false.
Assertion (A) is false, but Reason (R) is true.
Very Short Answer Questions (2 marks each)
What does public finance mean?
What do you understand by fiscal policy?
State two objectives of fiscal policy.
State and explain instruments of fiscal policy.
Which are the sources of public revenue?
What is a tax?
Explain any five characteristics of the tax.
Name any two direct taxes.
Mention any one difference between the impact of tax and the incidence of tax.
What are direct taxes?
Define Indirect tax
Define Indirect tax
Differentiate between direct and indirect taxes.
Differentiate between direct and indirect taxes.
Explain in brief two merits of direct tax.
What are the merits of an indirect tax?
Explain any five demerits of direct tax.
State three demerits of an Indirect tax.
Define proportional tax and show it graphically.
Differentiate between progressive taxation and proportional taxation.
What are progressive taxes.
Distinguish between regressive tax and degressive tax.
What is a degressive tax?
Explain how taxation can be used to reduce inequalities of income.
What is public expenditure?
How does public expenditure on social security schemes enhance production in an economy?
Distinguish between the following concepts:
Developmental expenditure and non-developmental expenditure.
Distinguish between productive and unproductive public expenditure, citing an example of each.
Differentiate between direct and transfer expenditure.
What is Wagner’s Law?
State two factors to highlight the importance of public expenditure.
How does an increase in public expenditure increase the level of employment in a country?
Explain two ways by which public expenditure promotes economic development.
Mention how does public expenditure reduces inequalities of income.
What do you mean by public debt?
Distinguish between internal debt and external debt.
Differentiate between productive and unproductive debt.
Distinguish between short-term and long-term debt.
Mention two reasons responsible for borrowing by the government.
Mention any three methods of redemption of public debt.
What is meant by ‘deficit financing’?
What is meant by sinking fund?
Short Answer Questions (3 marks each)
Discuss any two objectives of fiscal policy in a developing economy.
Explain various sources of public revenue.
Define a tax.
Explain the nature of taxes.
Distinguish between direct taxes and indirect taxes.
Distinguish between direct taxes and indirect taxes.
Highlight two differences between sales tax and income tax.
Explain in brief two merits of direct tax.
What are the merits of an indirect tax?
Distinguish between proportionate, progressive and regressive tax systems.
Distinguish between regressive tax and degressive tax.
‘Public expenditure helps in increasing production of an economy.’ In this context, discuss any two points of importance of public expenditure.
‘Public expenditure helps in increasing production of an economy.’ In this context, discuss any two points of importance of public expenditure.
Mention two reasons responsible for borrowing by the government.
Explain the following methods of debt redemption:
Refunding
Explain the following method of debt redemption:
Debt conversion
Mention any three methods of redemption of public debt.
What do you mean by deficit financing in the context of the Indian economy?
What role does deficit financing play in promoting economic development?
Is deficit financing inflationary? Give reasons for your answer.
Explain two effects of deficit financing.
In a situation of income inequality, give two ways in which fiscal policy can be used to bring about equity.
Long Answer Questions (6 marks each)
Define direct tax
Define Indirect tax
Explain in brief two merits of direct tax.
What are the merits of an indirect tax?
Define progressive taxation.
Define proportional tax and show it graphically.
Define regressive tax.
Define a degressive tax.
Which type of tax, among progressive, proportional, regressive, and degressive, would you support? Give reasons.
What is public expenditure?
Explain different types of public expenditure.
State two factors to highlight the importance of public expenditure.
Discuss the effects of public expenditure on employment.
Discuss the effects of public expenditure on economic growth.
Discuss the effects of public expenditure on inflation.
Discuss the effects of public expenditure on income distribution in an economy.
What do you mean by public debt?
Explain four types of public debt.
Mention two reasons responsible for borrowing by the government.
What do you mean by redemption of public debt?
Mention any three methods of redemption of public debt.
State two objectives of fiscal policy.
State two objectives of fiscal policy.
How can fiscal policy control inflation?
How does the fiscal policy of the government control inflation with the public expenditure?
How does the fiscal policy of the government control inflation with the taxation?
Discuss the role of fiscal policy in an underdeveloped economy.
Discuss the role of fiscal policy in an underdeveloped economy.
Discuss the role of fiscal policy in the economic development of a country.
Explain how equity can be achieved through fiscal policy.
Explain how stability can be achieved through fiscal policy.
Explain how growth can be achieved through fiscal policy.
Passage Based Questions (8 marks)
Read the passage below and answer the questions that follow.
| Taxation is the major source of revenue for the government. Tax structure of a country plays an important role in the functioning of the government and its economy. India has a well-developed tax structure. The most important feature of Indian tax structure is multiplicity of taxes. The tax structure in India is classified into direct taxes and indirect taxes. Although there is an increase in tax revenue over the years, still the tax revenue is insufficient looking into the requirements of the country. Tax to GDP ratio in India is low at 11.1 per cent in 2022-23 compared to the developed countries where it is in the range of 30 to 40 per cent. Tax base in India is very low in case of both direct taxes and indirect taxes. Despite considerable efforts for widening the tax base only 6.25 per cent of Indian population pays income tax. With a high percentage of indirect taxes, the tax structure in India is considered to be regressive since the burden of such taxes, falls on every one, irrespective of their capacity to pay. In the Indian tax structure, the incidence of taxation is much higher in the urban areas as compared to the rural areas. |
- Distinguish between direct taxes and indirect taxes. [2]
- What is meant by a regressive tax? [1]
- State the relative shares of direct taxes and indirect taxes in the Indian tax structure. [1]
- Why is the tax base in India narrow? [1]
- Why is the incidence of taxation lower in the rural areas? [1]
- 'Tax revenue is the main source of revenue receipts of the central government'. Illustrate this statement. [1]
- Is income tax in India progressive? Explain. [1]
Solutions for 16: Fiscal Policy
Frank solutions for इकॉनॉमिक्स [इंग्रजी] इयत्ता १२ आईएससी chapter 16 - Fiscal Policy
Shaalaa.com has the CISCE Mathematics इकॉनॉमिक्स [इंग्रजी] इयत्ता १२ आईएससी CISCE solutions in a manner that help students grasp basic concepts better and faster. The detailed, step-by-step solutions will help you understand the concepts better and clarify any confusion. Frank solutions for Mathematics इकॉनॉमिक्स [इंग्रजी] इयत्ता १२ आईएससी CISCE 16 (Fiscal Policy) include all questions with answers and detailed explanations. This will clear students' doubts about questions and improve their application skills while preparing for board exams.
Further, we at Shaalaa.com provide such solutions so students can prepare for written exams. Frank textbook solutions can be a core help for self-study and provide excellent self-help guidance for students.
Concepts covered in इकॉनॉमिक्स [इंग्रजी] इयत्ता १२ आईएससी chapter 16 Fiscal Policy are Introduction to Public Finance, Public Revenue, Nature and Significance of Taxes, Tax and Fee, Canons of Taxation, Types of Taxes, Merits of Direct Taxes, Demerits of Direct Taxes, Merits of Indirect Taxes, Demerits of Indirect Taxes, Direct Taxes vs Indirect Taxes, Kinds of Tax System > Proportional tax, Kinds of Tax System > Progressive Tax, Kinds of Tax System > Regressive Tax, Kinds of Tax System > Degressive Tax, Kinds of Tax System > Digressive Tax, Sources of Central Government Revenue, Sources of State Government Revenues, Value-Added Tax (VAT), Modified Value-Added Tax (MODVAT), MODVAT to CENVAT, Public Expenditure, Reasons for the Growth of Public Expenditures in India for Recent Times, Importance of Public Expenditure in a Developing Country, Public Debt, Structure (Types) of Public Debt, Reasons Behind Internal Public Debt, Reasons Behind External Public Debt, Methods of Redemption of Public Debt, The Burden of Public Debt, Main Sources of Internal & External Debt of the Government of India, Distinction Between Internal Debt and External Debt, Effects of Government Borrowings on the Indian Economy, Fiscal Policy, Objectives of Fiscal Policy, Role of Fiscal Policy, Instruments of Fiscal Policy, Fiscal Measures for Stabilisation, Effective Role of Fiscal Policy for Underdeveloped or Developing Country, Limitations of Fiscal Policy, Role of Fiscal Policy to Control Inflationary Situation, Deficit Financing, Reason for Deficit Financing, Effects of Deficit Financing, Limits of Deficit Financing, Introduction to Budget, Government Budget, Need and Importance of Government Budget, Objectives of Government Budget, Types of Government Budget in India, Modern Classification of Budget, Balanced and Unbalanced Budget, Unbalanced/Deficit - Surplus Budget, Zero-Base Budgeting (ZBB), Zero-Base Budgeting in India, Components (Structure) of the Government Budget, Budget Receipts, Revenue Receipts, Tax Receipts, Non-Tax Receipts, Capital Receipts, Budget Expenditure, Revenue Expenditure and Capital Expenditure, Plan Expenditure and Non-plan Expenditure, Budget Deficits, Budgetary Procedure, Developmental and Non-developmental Expenditures, Balanced Budget vs Deficit or Surplud Budget.
Using Frank इकॉनॉमिक्स [इंग्रजी] इयत्ता १२ आईएससी solutions Fiscal Policy exercise by students is an easy way to prepare for the exams, as they involve solutions arranged chapter-wise and also page-wise. The questions involved in Frank Solutions are essential questions that can be asked in the final exam. Maximum CISCE इकॉनॉमिक्स [इंग्रजी] इयत्ता १२ आईएससी students prefer Frank Textbook Solutions to score more in exams.
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