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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. 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

Increasing taxes to reduce consumption

Raising interest rates

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

Ensuring tax collection only from multinational companies

Maintaining government financial stability

Promoting high employment levels

Reducing income inequality

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

Spending by private companies on manufacturing goods

Spending by individuals in the economy

Expenditures on foreign imports

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

4. 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

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

Higher inflation due to increased demand in the economy

Increased unemployment

Lower government spending

A decrease in government debt

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

To collect more taxes from consumers

To discourage foreign investment

To encourage specific sectors or industries to grow

To reduce government spending

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

To regulate foreign trade agreements

To supervise the private sector

To manage government revenue and expenditures

To control inflation rates

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

Increasing interest rates to reduce borrowing

Increasing taxes on businesses

Increasing government spending to boost economic activity

Reducing government spending on public services

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

By providing tax exemptions for wealthy citizens

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

By encouraging only private sector investments

By raising taxes on all income groups equally

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

Fiscal policy does not affect the balance of payments

Fiscal policy only affects the banking sector

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

Fiscal policy exclusively manages foreign investments

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

Increasing public debt

Low inflation rates

High taxation rates

Lack of foreign trade agreements

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

The government’s expenditures exceed its revenue

The government borrows money from foreign countries

The government has no borrowing requirements

The government has excess revenue over its expenditures

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

The government borrows money to finance the deficit

The government reduces its spending

The government increases tax rates

The country’s currency strengthens

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

The rate at which taxes are imposed on businesses

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

The ability of the government to increase tax rates

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

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

Reducing tariffs on imported goods

Borrowing funds from international financial institutions to finance a budget deficit

Offering tax breaks to multinational corporations

Government taxing its citizens more heavily

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

To increase government spending on infrastructure

To decrease public spending and increase taxes to reduce inflationary pressures

To reduce exports to stabilize the economy

To reduce government borrowing

17. 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

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

To ensure the country’s foreign relations

To control the private sector’s investment

To ensure the country can meet its borrowing obligations

To increase taxes

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

Corporate tax

Sales tax

Income tax

All of the above

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

Increasing income taxes

Subsidizing exports

Lowering interest rates

Reducing government spending

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

Pakistan Stock Exchange

Federal Board of Revenue (FBR)

Ministry of Finance

Pakistan State Bank

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

Reducing government spending on infrastructure

Offering tax exemptions and incentives for businesses in specific sectors

Reducing foreign investment

Imposing high corporate tax rates

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

Adjusting interest rates through the State Bank

Collecting taxes from citizens and redistributing through welfare programs

Fixing the exchange rate for foreign currencies

Providing subsidies to foreign businesses

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

Raising taxes to reduce inflation

Lowering interest rates to encourage saving

Increasing the supply of money in the economy

Increasing government borrowing

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

Import quotas

Exchange rate management

Public debt management

Taxation rates

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

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

Fiscal policy has no effect on government debt

Fiscal policy directly reduces government debt

Fiscal policy reduces government borrowing through higher taxes

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

To decrease the national debt

To increase the government’s debt

To increase government spending

To reduce inflation

28. 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 difference between the government’s total revenue and its total expenditure

The amount of money spent on infrastructure projects

The amount of money the government collects from private investors

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

Providing subsidies to consumers

Increasing public sector wages

Decreasing government spending

Reducing the money supply through increased taxes

30. 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

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

All of the above

Income tax

Customs duty

Sales tax

32. 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

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

To increase government borrowing

To boost government spending to create jobs

To increase trade barriers

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

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

To reduce government spending

To encourage investments in certain sectors and stimulate economic growth

To regulate imports and exports

To increase tax rates across the board

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

High inflation rates and public debt

Excessive government savings

Low population growth

The absence of a tax system

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

To increase interest rates

To stabilize the economy through government spending and taxation

To promote exports only

To control the exchange rate

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

By increasing interest rates

By cutting taxes and increasing government spending to stimulate economic activity

By decreasing public sector wages

By reducing government expenditure

38. 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 only affects the financial sector

Fiscal policy is irrelevant to economic growth

Fiscal policy hinders economic growth by raising taxes

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

The ability of the government to reduce taxes

The collection of income taxes from multinational companies only

The government’s ability to monitor foreign investment

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

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

To limit the wealth of individuals

To control population growth

To reduce public services

To fund government expenditure and services

41. 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

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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

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