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Economics · Class 12 Commerce

Ch 9Fiscal Economics — Class 12 Economics, concept-first.

Public Finance is the branch of economics that studies the income, expenditure, borrowing and financial administration of public authorities — the Union Government, State Governments and local bodies.

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Key concepts

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Public Finance: Meaning, Scope and Distinction from Private Finance

Public finance studies the revenue, expenditure, borrowing and financial administration of government. Unlike private finance, where income determines expenditure, government expenditure is often decided first (by policy…

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Chapter contents

The NCERT structure, section by section. Open a section to see its questions, then read the concept-first solution.

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Meaning, Scope and Importance of Public Finance

Public Finance is the branch of economics that studies the income, expenditure, borrowing and financial administration of public authorities — the Union Government, State Governments and local bodies.…

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Public Revenue: Tax Revenue and Non-Tax Revenue

Public Revenue refers to all the income received by the government from all sources during a given period. It is broadly divided into two categories.

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Canons of Taxation

Since taxation is compulsory, a well-designed tax system must follow certain principles so that it raises revenue fairly and efficiently.

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Public Expenditure: Growth and Classification

Public expenditure is the spending incurred by public authorities to perform their functions — maintaining law and order, providing defence, building infrastructure, and promoting social and economic…

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Public Debt: Classification and Methods of Redemption

Public debt refers to the borrowings of the government, undertaken when its expenditure exceeds the revenue it can raise through taxation and other non-debt sources.

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Government Budget: Types and Measures of Deficit

The Government Budget is an annual financial statement showing the government's estimated receipts and estimated expenditure for the coming financial year.

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Fiscal Policy: Objectives and Instruments

Fiscal Policy refers to the deliberate use of government revenue (taxation) and government expenditure as instruments to influence the level of economic activity, in pursuit of specific macroeconomic…

Exercises

+Show 11 questions11 questions
  1. Q1Distinguish between Public Finance and Private Finance.Free
  2. Q2Explain the scope of public finance.Free
  3. Q3Distinguish between Tax Revenue and Non-Tax Revenue, with two examples of each.Free
  4. Q4Classify each of the following as (a) Direct Tax or Indirect Tax, and (b) Tax Revenue or Non-Tax Revenue: (i) Income Tax (ii) Goods and Serv…Preview
  5. Q5Explain Adam Smith's four canons of taxation.Preview
  6. Q6Explain any four reasons for the continuous growth of public expenditure in modern economies.Preview
  7. Q7Distinguish between Revenue Expenditure and Capital Expenditure, with two examples of each.Preview
  8. Q8Explain the classification of public debt on the basis of (a) source and (b) purpose.Preview
  9. Q9Explain the Sinking Fund method and the Conversion method of redeeming public debt.Preview
  10. Q10Distinguish between a Balanced Budget, a Surplus Budget and a Deficit Budget.Preview
  11. Q14Explain the objectives and instruments of Fiscal Policy.Preview

Sample & Board Papers

Sample papers and previous-year board questions for this subject.

+Show 28 questions28 questions
  1. Q1Find out the non-Tax Revenue : (a) Surcharge (b) Income Tax (c) Cess (d) FeesPreview
  2. Q2The Modern State is : (a) Police State (b) Laissez-Faire State (c) Aristocratic State (d) Welfare StatePreview
  3. Q3Define Public Finance.Preview
  4. Q4Describe the canons of Taxation.Preview
  5. Q5(a) Bring out the Merits of Indirect Taxes and Direct Taxes. OR (b) Elucidate the Nature and Scope of Statistics.Preview
  6. Q6(a) What are the causes for increasing public debt ? OR (b) Define - Air pollution and mention the causes of Air pollution.Preview
  7. Q7The Modern State is : (a) Welfare state (b) Laissez-faire state (c) Police state (d) Aristocratic statePreview
  8. Q8What is public revenue ?Preview
  9. Q9What are the types of Local bodies ?Preview
  10. Q10What are the functions of Modern State ?Preview
  11. Q11(a) Describe Canons of Taxation. OR (b) What are causes of Water Pollution ?Preview
  12. Q12Finance Commission determines : (a) The resources transfer to the States (b) The resources transfer to the various departments (c) The finan…Preview
  13. Q13Method of Repayment of Public Debt is ________. (a) Sinking Fund (b) Terminal Annuity (c) Conversion of Loans (d) All of the abovePreview
  14. Q14List out any three taxes, that are levied and collected by the Union but assigned to the States, according to Article-269.Preview
  15. Q15(a) What do you mean by GST ? Explain its advantages. OR (b) State the causes of Land Pollution and mention the remedial measures to control…Preview
  16. Q16GST is equivalence of : (a) Income tax (b) Sales tax (c) Local tax (d) Corporation taxPreview
  17. Q17Write a note on 'Zero based budget'.Preview
  18. Q18What are the components of GST ?Preview
  19. Q19Point out any three differences between Direct taxes and Indirect taxes.Preview
  20. Q20Write any three characteristics of Tax.Preview
  21. Q21Which of the following is a direct tax? (a) Income tax (b) Excise duty (c) Service tax (d) Customs dutyPreview
  22. Q22Primary Deficit (PD) = __________. (a) Total Expenditure − Total Revenue (b) Fiscal Deficit − Interest Payment (c) Total Revenue Expenditure…Preview
  23. Q23What are the functions of Modern State ?Preview
  24. Q24(a) Describe the various types of deficit in budget. OR (b) Explain the concepts of externality and its classification.Preview
  25. Q25The objectives of Fiscal Policy is : (a) Price stability (b) Economic growth (c) Full employment (d) All of the abovePreview
  26. Q26GST is equivalence of ______. (a) Income tax (b) Sales tax (c) Local tax (d) Corporate taxPreview
  27. Q27State any three characteristics of Tax.Preview
  28. Q28(a) Explain the scope of Public Finance. OR (b) Narrate the equilibrium between ADF and ASF with diagram.Preview

More questions

+Show 3 questions3 questions
  1. Q11From the following data, calculate the Revenue Deficit: Revenue Receipts = ₹18,000 crore; Revenue Expenditure = ₹21,500 crore.Free
  2. Q12From the following data, calculate the Fiscal Deficit: Total Expenditure = ₹40,000 crore; Revenue Receipts = ₹25,000 crore; Recovery of Loan…Preview
  3. Q13From the following budget data, calculate the Revenue Deficit, the Fiscal Deficit, and the Primary Deficit: Revenue Receipts = ₹50,000 crore…Preview