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Fiscal Policy of Pakistan Test Online

Mustansar KhanLast Updated: July 8, 2025

Fiscal Policy of Pakistan Test Online

Fiscal Policy of Pakistan Test

Total Questions:	41
Time Allowed:	20 Minutes
Total Marks:	41
How to Attempt Test:	Please choose the right Option in MCQ-type question.
Test Helpful For:	FBR Sub Inspector Test Customs Inspector Test FBR Interviews FBR Sepoy Test Preparation for Customs and Tax Related Questions

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1. Which of the following is the main purpose of the “Public Debt Management” in Pakistan’s fiscal policy?

To increase taxes

To ensure the country can meet its borrowing obligations

To control the private sector’s investment

To ensure the country’s foreign relations

2. Which of the following best defines the term 'fiscal deficit' in the context of Pakistan’s fiscal policy?

The amount of money the government collects from private investors

The amount of money spent on infrastructure projects

The difference between the government’s total revenue and its total expenditure

The total amount of money the government owes to foreign countries

3. What is the impact of fiscal policy on the balance of payments in Pakistan?

Fiscal policy can impact exports and imports through taxation and government spending

Fiscal policy only affects the banking sector

Fiscal policy does not affect the balance of payments

Fiscal policy exclusively manages foreign investments

4. Which of the following best defines the term "public expenditure" in the context of Pakistan's fiscal policy?

Spending by individuals in the economy

Spending by private companies on manufacturing goods

Government spending on public services such as education, healthcare, and infrastructure

Expenditures on foreign imports

5. How does Pakistan’s fiscal policy help in reducing income inequality?

By raising taxes on all income groups equally

By taxing high-income earners and redistributing wealth through social welfare programs

By providing tax exemptions for wealthy citizens

By encouraging only private sector investments

6. What is the main purpose of "fiscal consolidation" in Pakistan’s fiscal policy?

To reduce the budget deficit and national debt by cutting unnecessary spending and increasing revenues

To boost government spending to create jobs

To increase trade barriers

To increase government borrowing

7. Which of the following is NOT a fiscal policy objective of Pakistan?

Reducing income inequality

Maintaining government financial stability

Promoting high employment levels

Ensuring tax collection only from multinational companies

8. What does "tax buoyancy" refer to in fiscal policy?

The ability of the government to collect taxes from a large number of people

The rate at which taxes are imposed on businesses

The ability of the tax system to generate revenue in response to economic growth

The ability of the government to increase tax rates

9. What fiscal policy tool is used to manage inflation in Pakistan?

Lowering interest rates

Reducing government spending

Increasing income taxes

Subsidizing exports

10. What is the relationship between fiscal policy and government debt in Pakistan?

Fiscal policy directly reduces government debt

Fiscal policy has no effect on government debt

Fiscal policy reduces government borrowing through higher taxes

Fiscal policy may increase government debt if there is a fiscal deficit

11. Which of the following is a primary challenge faced by fiscal policy in Pakistan?

Low inflation rates

High taxation rates

Lack of foreign trade agreements

Increasing public debt

12. Which of the following would be a likely consequence of a fiscal stimulus in Pakistan?

Lower government spending

Increased unemployment

A decrease in government debt

Higher inflation due to increased demand in the economy

13. Which of the following is an example of the government’s role in fiscal policy through public debt management?

Offering tax breaks to multinational corporations

Reducing tariffs on imported goods

Government taxing its citizens more heavily

Borrowing funds from international financial institutions to finance a budget deficit

14. Which of the following is a major goal of fiscal policy in Pakistan?

To promote exports only

To increase interest rates

To stabilize the economy through government spending and taxation

To control the exchange rate

15. What is the purpose of taxation in Pakistan’s fiscal policy?

To limit the wealth of individuals

To fund government expenditure and services

To reduce public services

To control population growth

16. What is the role of "tax incentives" in Pakistan’s fiscal policy?

To reduce government spending

To regulate imports and exports

To increase tax rates across the board

To encourage investments in certain sectors and stimulate economic growth

17. How does the government of Pakistan utilize fiscal policy during periods of economic recession?

By reducing government expenditure

By cutting taxes and increasing government spending to stimulate economic activity

By decreasing public sector wages

By increasing interest rates

18. Which of the following is considered a "fiscal tool" used by the government of Pakistan to manage inflation?

Increasing government spending on welfare programs

Decreasing public sector employment

Raising interest rates

Increasing taxes to reduce consumption

19. Which of the following is an effect of a fiscal stimulus in Pakistan?

Increased taxation

Boost in economic activity through increased government spending

Reduction in government spending

Decrease in inflation rates

20. Which of the following taxes is directly linked to Pakistan’s fiscal policy?

Income tax

Customs duty

All of the above

Sales tax

21. What is the primary objective of a budget surplus in Pakistan’s fiscal policy?

To increase government spending

To decrease the national debt

To increase the government’s debt

To reduce inflation

22. What is the role of the Ministry of Finance in Pakistan’s fiscal policy?

To regulate foreign trade agreements

To manage government revenue and expenditures

To supervise the private sector

To control inflation rates

23. What does the term 'budget deficit' mean in Pakistan’s fiscal policy?

The government borrows money from foreign countries

The government has no borrowing requirements

The government has excess revenue over its expenditures

The government’s expenditures exceed its revenue

24. What is the primary challenge of managing Pakistan's fiscal policy in a developing economy?

Low population growth

The absence of a tax system

High inflation rates and public debt

Excessive government savings

25. Which of the following is an example of fiscal policy’s role in economic stabilization in Pakistan?

Collecting taxes from citizens and redistributing through welfare programs

Fixing the exchange rate for foreign currencies

Adjusting interest rates through the State Bank

Providing subsidies to foreign businesses

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26. Which of the following is a consequence of a fiscal deficit in Pakistan?

The government borrows money to finance the deficit

The country’s currency strengthens

The government increases tax rates

The government reduces its spending

27. What is "tax compliance" in the context of Pakistan’s fiscal policy?

The ability of the government to reduce taxes

The government’s ability to monitor foreign investment

The degree to which taxpayers follow the laws and regulations regarding taxes

The collection of income taxes from multinational companies only

28. Which of the following is an example of expansionary fiscal policy in Pakistan?

Increasing taxes on businesses

Reducing government spending on public services

Increasing interest rates to reduce borrowing

Increasing government spending to boost economic activity

29. What is the main purpose of subsidies in Pakistan’s fiscal policy?

To discourage foreign investment

To reduce government spending

To collect more taxes from consumers

To encourage specific sectors or industries to grow

30. How does Pakistan’s fiscal policy address poverty reduction?

By raising taxes on essential goods

By reducing government expenditure

By offering incentives to large multinational corporations

By providing social welfare programs to low-income households

31. Which of the following is a tool used in fiscal policy to manage economic cycles in Pakistan?

Exchange rate management

Public debt management

Import quotas

Taxation rates

32. Which of the following taxes is used by the government of Pakistan to raise revenue for fiscal policy?

Sales tax

All of the above

Income tax

Corporate tax

33. What is the relationship between fiscal policy and economic growth in Pakistan?

Fiscal policy hinders economic growth by raising taxes

Fiscal policy is irrelevant to economic growth

Proper fiscal policy can promote economic growth by investing in infrastructure and social programs

Fiscal policy only affects the financial sector

34. Which government body is primarily responsible for implementing fiscal policy in Pakistan?

Pakistan State Bank

Federal Board of Revenue (FBR)

Ministry of Finance

Pakistan Stock Exchange

35. Which of the following measures is used in Pakistan’s fiscal policy to control inflation?

Increasing public sector wages

Providing subsidies to consumers

Decreasing government spending

Reducing the money supply through increased taxes

36. What is the main objective of Pakistan's fiscal policy during periods of high inflation?

To reduce exports to stabilize the economy

To decrease public spending and increase taxes to reduce inflationary pressures

To increase government spending on infrastructure

To reduce government borrowing

37. What does "monetary expansion" refer to in Pakistan's fiscal policy context?

Increasing the supply of money in the economy

Increasing government borrowing

Raising taxes to reduce inflation

Lowering interest rates to encourage saving

38. Which of the following fiscal measures is used by Pakistan to improve the business environment?

Reducing foreign investment

Imposing high corporate tax rates

Reducing government spending on infrastructure

Offering tax exemptions and incentives for businesses in specific sectors

39. How does Pakistan's fiscal policy help in managing unemployment?

By limiting foreign investment

By increasing government spending on development projects to create jobs

By reducing taxes for large corporations only

By providing direct employment in the public sector

40. What is the impact of fiscal policy on unemployment in Pakistan?

Fiscal policy only impacts inflation and not unemployment

By increasing government spending on infrastructure projects, fiscal policy can create jobs and reduce unemployment

Fiscal policy does not affect unemployment

By increasing taxes, fiscal policy leads to higher unemployment

41. What is meant by “contractionary fiscal policy” in Pakistan?

Lowering interest rates to boost investments

Increasing government spending to stimulate the economy

Reducing government spending and increasing taxes to reduce inflation

Increasing government borrowing to finance public services

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Mustansar KhanLast Updated: July 8, 2025

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Fiscal Policy of Pakistan Test Online

Fiscal Policy of Pakistan Test Online

Fiscal Policy of Pakistan Test

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