Economic World : What is the difference between the income effect a...

Economic World : What is the difference between the income effect a...: What is the difference between the income effect and the substitution effect of a price change? (A) The income effect is the change in deman...

Public Finance 

1. Public finance is the study of the income and expenditure, or the receipt and payment, of the government.

2. The principle of maximum social advantage was introduced by Dalton.

3. A tax that is levied on the value added at each stage of production and distribution is called a value added tax.

4. The tax system in India is progressive, which means the tax rate increases as the income increases.

5. The burden of direct taxes is borne by the taxpayer, while the burden of indirect taxes can be shifted to others.

6. The main objective of a tax is to raise public revenue.

7. The canon of taxation that states that the tax should be levied according to the ability of the taxpayer to pay is called the canon of equity.

8. The tax that is levied on goods when they enter a town is called octroi.

9. Public goods are those goods that have the characteristic of non-rivalry, which means that one person's consumption does not reduce the availability for others.

10. The technique of budgeting that requires every expenditure to be justified from zero base every year is called zero-base budgeting.

Economic World : Economics important Questions with Answers

Economic World : Economics important Questions with Answers:  Economics important Questions with Answers  1. **Who is recognized as the founding figure of economics?** - **Answer**: **Adam Smith**². 2....

 Economics important Questions with Answers 

1. **Who is recognized as the founding figure of economics?**

- **Answer**: **Adam Smith**².

2. **What are the three fundamental economic predicaments?**

- **Answer**: The three fundamental economic predicaments are:

- **Scarcity**: Limited resources in relation to unlimited desires.

- **Choice**: The necessity to make decisions due to scarcity.

- **Opportunity cost**: The value of the next best alternative forgone when a choice is made².

3. **How do full employment, price stability, economic growth, and inflation reflect a country's economy?**

- **Answer**: These factors indicate the overall well-being of an economy:

- **Full employment**: Signifies a robust labor market.

- **Price stability**: Reflects controlled inflation.

- **Economic growth**: Demonstrates a flourishing economy.

- **Inflation**: Impacts purchasing power and overall stability².

4. **What is the distinction between macroeconomics and microeconomics?**

- **Answer**: Macroeconomics examines the economy as a whole (like a forest), while microeconomics focuses on individual components (like trees) such as households, firms, and markets².

5. **What are Giffen goods?**

- **Answer**: Giffen goods are those that people consume more of when their prices rise. They defy the usual demand curve behavior³.

6. **Who invests significant amounts in stocks, property, or other ventures with risk for potential gain?**

- **Answer**: Such individuals are referred to as **speculators**³.

7. **Which stage of the product life cycle generally has high unit costs?**

- **Answer**: The **introductory stage** tends to have higher costs per unit³.

8. **Which bank provides financing for exports and imports?**

- **Answer**: The **EXIM Bank** is responsible for financing exports and imports³.

9. **What type of unemployment results from an economic depression?**

- **Answer**: **Cyclical unemployment** occurs during economic downturns³.