Public Finance: Budget and Expenditure Planning

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What is the ultimate goal of allocating public expenditure in different lines of state activity?

To maximize public goods production
To reach the highest possible indifference surface (correct)
To maximize leisure time
To minimize private goods consumption

What is the main difficulty in constructing a community indifference surface?

Government expenditure is limited
Resource allocation is inefficient
People cannot reveal their preference pattern (correct)
Individual indifference patterns are unknown

What does control of public expenditure imply?

Justification of expenditure in terms of societal welfare (correct)
Reduction of public expenditure
Increased public expenditure
Complete elimination of public expenditure

What is the primary stage of expenditure control?

Budget preparation (D) Signup and view all the answers

What are the different means of control of public expenditure?

Budgetary, legislative, executive, audit, and parliamentary control (B) Signup and view all the answers

What is the purpose of controlling public expenditure?

To ensure efficient utilization of public funds (A) Signup and view all the answers

What is the purpose of a budget in the context of public expenditure?

To provide spending authorities with knowledge of public fund usage (B) Signup and view all the answers

Which theory of public expenditure is associated with Adam Smith's 'laissez-faire' philosophy?

Classical Theory of Minimum Expenditure (A) Signup and view all the answers

What is the primary goal of Lindahl's Benefit Model of Voluntary Exchange?

To determine the optimal tax share for each citizen (D) Signup and view all the answers

What is the main advantage of a well-planned budget in the context of public expenditure?

It ensures responsible allocation of public funds (D) Signup and view all the answers

Which theory of public expenditure focuses on optimizing public expenditure for maximum social welfare?

Musgrave's Optimum Budget Theory of Public Expenditure (A) Signup and view all the answers

What is the main purpose of joint cost allocation in the context of public goods provision?

To allocate the costs of public goods provision among beneficiaries (A) Signup and view all the answers

What is the primary focus of planning and implementing public expenditure according to the canon?

Achieving maximum social advantage (C) Signup and view all the answers

What is a key objective of public expenditure according to the canon?

Achieving price stability and economic growth (C) Signup and view all the answers

What is the consequence of not following the canon of economy?

Wastage of funds and misallocation of resources (A) Signup and view all the answers

What is the purpose of undertaking a cost-benefit analysis according to the canon?

To select the most beneficial investment project (C) Signup and view all the answers

What is the key principle behind the canon of economy?

Most proper utilization of resources (C) Signup and view all the answers

What are some common reasons for wasteful expenditure according to the canon?

Faulty planning, corrupt practices, and time lag (A) Signup and view all the answers