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

To increase government spending on infrastructure

To reduce exports to stabilize the economy

To reduce government borrowing

To decrease public spending and increase taxes to reduce inflationary pressures

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

Federal Board of Revenue (FBR)

Pakistan Stock Exchange

Ministry of Finance

Pakistan State Bank

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

Fixing the exchange rate for foreign currencies

Adjusting interest rates through the State Bank

Providing subsidies to foreign businesses

Collecting taxes from citizens and redistributing through welfare programs

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

The government has no borrowing requirements

The government has excess revenue over its expenditures

The government’s expenditures exceed its revenue

The government borrows money from foreign countries

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

Boost in economic activity through increased government spending

Increased taxation

Reduction in government spending

Decrease in inflation rates

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

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

By limiting foreign investment

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

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

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 government to increase tax rates

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

All of the above

Sales tax

Customs duty

Income tax

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

By decreasing public sector wages

By reducing government expenditure

By cutting taxes and increasing government spending to stimulate economic activity

By increasing interest rates

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

To increase government borrowing

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

To increase trade barriers

To boost government spending to create jobs

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

To limit the wealth of individuals

To reduce public services

To fund government expenditure and services

To control population growth

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

To ensure the country can meet its borrowing obligations

To increase taxes

To control the private sector’s investment

To ensure the country’s foreign relations

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

To control the exchange rate

To increase interest rates

To promote exports only

To stabilize the economy through government spending and taxation

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

The government borrows money to finance the deficit

The government increases tax rates

The country’s currency strengthens

The government reduces its spending

15. 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

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

By providing tax exemptions for wealthy citizens

By raising taxes on all income groups equally

By encouraging only private sector investments

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

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

Lowering interest rates

Reducing government spending

Increasing income taxes

Subsidizing exports

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

Providing subsidies to consumers

Decreasing government spending

Increasing public sector wages

Reducing the money supply through increased taxes

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

Lowering interest rates to encourage saving

Increasing the supply of money in the economy

Raising taxes to reduce inflation

Increasing government borrowing

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

Excessive government savings

Low population growth

High inflation rates and public debt

The absence of a tax system

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

Fiscal policy reduces government borrowing through higher taxes

Fiscal policy has no effect on government debt

Fiscal policy directly reduces government debt

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

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

To reduce government spending

To collect more taxes from consumers

To encourage specific sectors or industries to grow

To discourage foreign investment

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

Public debt management

Taxation rates

Exchange rate management

Import quotas

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

Increasing government borrowing to finance public services

Reducing government spending and increasing taxes to reduce inflation

Increasing government spending to stimulate the economy

Lowering interest rates to boost investments

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

The total amount of money the government owes to foreign countries

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

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

To manage government revenue and expenditures

To regulate foreign trade agreements

To supervise the private sector

To control inflation rates

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

Reducing income inequality

Maintaining government financial stability

Ensuring tax collection only from multinational companies

Promoting high employment levels

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

Fiscal policy exclusively manages foreign investments

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

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

The collection of income taxes from multinational companies only

The ability of the government to reduce taxes

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

The government’s ability to monitor foreign investment

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

To decrease the national debt

To increase government spending

To increase the government’s debt

To reduce inflation

31. 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

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

Increased unemployment

Lower government spending

A decrease in government debt

Higher inflation due to increased demand in the economy

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

Sales tax

Income tax

All of the above

Corporate tax

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

Spending by individuals in the economy

Expenditures on foreign imports

Spending by private companies on manufacturing goods

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

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

Reducing foreign investment

Imposing high corporate tax rates

Offering tax exemptions and incentives for businesses in specific sectors

Reducing government spending on infrastructure

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

Government taxing its citizens more heavily

Reducing tariffs on imported goods

Offering tax breaks to multinational corporations

Borrowing funds from international financial institutions to finance a budget deficit

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

By offering incentives to large multinational corporations

By reducing government expenditure

By raising taxes on essential goods

By providing social welfare programs to low-income households

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

To regulate imports and exports

To increase tax rates across the board

To reduce government spending

To encourage investments in certain sectors and stimulate economic growth

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

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

Fiscal policy hinders economic growth by raising taxes

Fiscal policy only affects the financial sector

Fiscal policy is irrelevant to economic growth

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

Increasing interest rates to reduce borrowing

Increasing government spending to boost economic activity

Increasing taxes on businesses

Reducing government spending on public services

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

Fiscal policy does not affect unemployment

Fiscal policy only impacts inflation and not unemployment

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

By increasing taxes, fiscal policy leads to higher unemployment

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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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Fiscal Policy of Pakistan Test Online

Fiscal Policy of Pakistan Test

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