vital role in both developed and underdeveloped economies. In advanced or developed economies, there is a problem of economic instability due to either ‘lack of demand’ or ‘excess of demand’. In under developed countries, fiscal policy is one of the instruments for achieving faster economic growth. Fiscal Policy became popular after the Great Depression.
Government’s intervention was emphasised by J.M.Keynes to get the economies out of the Depression. There is close association between governments spending, private investment, interest rate, consumption and income growth. Glossary Tax: Compulsory payment paid by the citizens to the Government without any quid pro quo. Quid pro quo: A favour or advantage granted in return for something.
Proportional Tax: Tax is imposed at the same rate irrespective of tax base Progressive Tax: The rate of tax increases with the increase in tax base (income) Regressive Tax: High rate of tax is levied on the poor and low rate is levied to the rich Internal public debt: A loan taken by the Government from the citizens or from different institutions with in the country External public debt: A loan taken from abroad or from an international organisation Fiscal Policy: Policy related with the revenue and expenditure process of the Government Deficit Budget: The gap between Government anticipated revenue and the targeted expenditure Budget: It is an annual financial statement which shows the income and expenditure of the Government Federal Finance: The system of assigning the source of revenue to the Central as well as State Governments. Local Finance: Local finance refers to the finance of local bodies in India - - Fiscal Economics . The modern state is a) Laissez-faire state b) Aristocratic state c) Welfare state d) Police state . One of the following is NOT a feature of private finance a) Balancing of income and expenditure b) Secrecy c) Saving some part of income d) Publicity .
The tax possesses the following characteristics a) Compulsory b) No quid pro quo c) Failure to pay is offence d) All the above . Which of the following canons of taxation was not listed by