Theories of public expenditure - canons of public expenditure, growth of public expenditure, public expenditure in India, public debt - burden and effects, methods of repayment, public borrowing and development finance in India - One Line Questions

1. Public expenditure in India has grown due to: — Expansion of social security and welfare measures
2. The growth of public expenditure in India is also attributed to: — The increasing complexity of government administration and defense needs
3. The 'Growth of Public Expenditure' in India has been influenced by: — Increased defense needs and emphasis on economic development
4. A Capital Levy as a method of debt repayment is: — A one-time tax on accumulated wealth
5. The 'Canon of Benefit' suggests that public expenditure should be: — Proportionate to the benefits received by individuals
6. According to Musgrave, what are the three main functions of public finance? — Allocation, Distribution, and Stabilization
7. Which of the following is NOT considered a canon of public expenditure according to traditional principles? — Canon of Elasticity
8. The 'Canon of Public Finance' that emphasizes that expenditure should not exceed the income is known as the: — Canon of Budgets
9. Development finance in India is often channeled through: — Specialized financial institutions and government schemes
10. Which method of repayment involves a gradual reduction of debt over time through regular installments? — Amortization
11. Which of the following is a method of public debt repayment that involves paying off the debt through a lottery system? — Lottery Bonds
12. Which factor is primarily responsible for the significant growth of public expenditure in India post-independence? — Increased defense spending and social welfare programs
13. Wagner's Law of Increasing State Activity posits that the growth of public expenditure is a consequence of: — Urbanization and industrialization
14. The Canon of Sanction implies that public expenditure must be: — Authorized by a competent authority
15. Which of the following is a major component of public borrowing in India? — Issuance of government bonds and treasury bills
16. Which of the following is a significant reason for the increase in public expenditure on social services in India? — Constitutional mandate for welfare state and poverty reduction
17. The concept of 'Ricardian Equivalence' suggests that: — Government borrowing has no impact on aggregate demand
18. The Fiscal Responsibility and Budget Management (FRBM) Act in India aims to: — Enhance fiscal discipline and reduce the fiscal deficit
19. Which of the following is a potential negative effect of a large public debt? — Crowding out of private investment
20. Which of the following is a consequence of heavy public borrowing? — Higher interest payments, diverting funds from development
21. Public borrowing for productive purposes is justified because it: — Enhances the productive capacity of the economy, generating future returns
22. When the government borrows from the public, it can lead to 'crowding out' by: — Increasing interest rates, making borrowing more expensive for private firms
23. The 'burden' of public debt can be mitigated by: — Ensuring economic growth outpaces the debt growth rate
24. Which of the following is a significant challenge related to public debt in India? — High interest payments consuming a large part of government revenue
25. The 'burden' of external debt is generally considered heavier than internal debt because: — External debt requires payment in foreign currency, implying resource outflow
26. A 'productive' public debt is one that: — Is used to finance capital formation that generates future income
27. Which of the following is a mechanism for development finance in India? — National Small Savings Fund
28. Which of the following is a true statement about the 'burden' of internal public debt? — It is a transfer payment within the economy
29. An external public debt imposes a burden on the economy because: — It requires the transfer of real resources to foreign countries
30. Which theory explains the continuous increase in the share of public expenditure in national income over time? — Wagner's Law of Increasing State Activity
31. The Sinking Fund Method of debt repayment involves: — Setting aside a fund annually to redeem the debt
32. The Canon of Economy in public expenditure emphasizes: — Minimizing the cost of public services
33. In India, public borrowing is primarily managed by which institution? — Reserve Bank of India (RBI)
34. The 'burden' of public debt is primarily about the: — Cost of servicing the debt and its impact on resource allocation
35. Amortization as a method of debt repayment implies: — Making periodic payments that include both interest and a portion of the principal
36. The 'Displacement Effect' in the context of public expenditure growth suggests that: — Private spending is displaced by public spending during crises
37. Development finance in India primarily aims to: — Fund infrastructure projects and social sector programs
38. What is the primary role of the RBI in managing public debt in India? — Managing the issuance and redemption of government securities
39. Development finance in India focuses on funding: — Projects that enhance productive capacity and long-term growth
40. Development finance in India aims to mobilize resources for: — Long-term capital formation and economic growth
41. Which method of public debt repayment involves replacing an old loan with a new one, often at a lower interest rate? — Conversion
42. Which institution plays a crucial role in providing long-term finance for industrial development in India? — All of the above
43. The 'Canons of Public Expenditure' are principles that guide: — The judicious use of government funds
44. When public debt is held domestically, the burden is primarily a transfer of purchasing power from: — Taxpayers to bondholders
45. The 'burden' of public debt is reduced if: — The economy grows faster than the interest rate on debt
46. The 'burden' of public debt is best understood as: — The potential future taxation required to repay the debt
47. The concept of 'burden of public debt' is most closely related to: — The opportunity cost of resources used for debt servicing
48. Which of the following is a primary objective of public borrowing in India? — To cover revenue deficits and fund capital projects
49. The Canon of Equity suggests that public expenditure should be: — Progressive in nature, benefiting the poor more
50. Which theory suggests that public expenditure should be limited to the extent that its marginal social benefit equals its marginal social cost? — Musgrave's Theory of Public Finance
All One Line Questions
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