Public Finance
Economics · 50 practice questions
Meaning and objectives of public finance; fiscal policy and its instruments; sources of government revenue (taxes, royalties, rents, grants, aids); principles of taxation; tax incidence and its effects; effects of public expenditure; government budgets and public debt; revenue allocation and resource control in Nigeria.
- Identify the objectives of public finance and explain fiscal policy instruments.
- Compare the various sources of government revenue.
- Analyse the principles and incidence of taxation.
- Examine the effects of public expenditure and budgets.
- Highlight the criteria for revenue allocation in Nigeria.
Try a few questions
- Practice question 1
A government running a balanced budget has
- A.total revenue exactly equal to total expenditure in that fiscal period
- B.revenue permanently exceeding expenditure
- C.expenditure permanently exceeding revenue
- D.no revenue or expenditure at all
Show the answer
A. total revenue exactly equal to total expenditure in that fiscal period
A balanced budget means revenue equals expenditure.
- Practice question 2
For a taxpayer earning ₦300,000, with the next ₦150,000 (above the first ₦150,000) taxed at 7%, the tax due on that portion is
- A.₦15,000
- B.₦1,050
- C.₦10,500
- D.₦21,000
Show the answer
C. ₦10,500
Tax = 150,000 × 0.07 = 10,500.
- Practice question 3
A specific tax, as opposed to an ad valorem tax, is charged as
- A.a percentage of the value of the good
- B.a percentage of the buyer's total income
- C.a fixed naira amount per unit of the good, regardless of its price
- D.a one-time tax on company formation only
Show the answer
C. a fixed naira amount per unit of the good, regardless of its price
Specific taxes are fixed per unit, unlike value-based ad valorem taxes.
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