Which one of the following canons of taxation was not advocated by Adam Smith?
- A.Canon of equality
- B.Canon of certainty
- C.Canon of convenience
- D.Canon of fiscal adequacy
Correct answer
Explanation
The correct answer is D, Canon of fiscal adequacy. Adam Smith laid down four canons of taxation, and fiscal adequacy was not one of them; it was added by later economists.
In The Wealth of Nations (1776), Smith said a good tax should follow equality, meaning people pay in proportion to their ability; certainty, meaning the amount and time of payment are clear, not arbitrary; convenience, meaning the tax is collected at a time and in a manner suited to the payer; and economy, meaning the cost of collection is kept low. Later writers such as Bastable added canons like productivity or fiscal adequacy, elasticity, flexibility, simplicity and diversity.
A is wrong because equality is Smith's first and most famous canon. B is wrong because certainty is one of his four canons. C is wrong because convenience is also among the four canons he set out in The Wealth of Nations.
Exam tip: Adam Smith's four canons are equality, certainty, convenience and economy; productivity and elasticity came later.
Practice Questions
View allWhich one of the following is a good statistic to evaluate where an economy stands in the financial cycle ?
- A.Tax/GDP Ratio
- B.Fiscal Deficit/GDP Ratio
- C.Household Consumption/GDP Ratio
- D.Credit/GDP Ratio
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The financial cycle is the rise and fall of credit and asset prices, and the ratio of credit to GDP shows how far borrowing has run ahead of the economy.
Read the full explanation →According to John Maynard Keynes, employment depends upon
- A.aggregate demand
- B.aggregate supply
- C.effective demand
- D.rate of interest
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In Keynes's theory the level of employment in an economy is fixed by effective demand, the level of total spending at which aggregate demand equals aggregate supply.
Read the full explanation →Which one of the following statements about Mission Indradhanush, launched by the Government of India in 2014, is correct ?
- A.It relates to provisions for Child Health Screening and Early Intervention Services.
- B.It meets the diverse health needs of adolescents.
- C.It aims to increase the full immunisation coverage for children.
- D.Its objective is to achieve universal access to equitable, affordable, and quality healthcare services.
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Mission Indradhanush aims to raise full immunisation coverage among children, and it also covers pregnant women. The Ministry of Health and Family Welfare launched it on 25 December 2014 to reach children who had been left out or only partly vaccinated under the routine Universal Immunisation Programme.
Read the full explanation →Which one of the following hypotheses postulates that individual's consumption in any time period depends upon resources available to the individual, rate of return on his capital and age of the individual?
- A.Absolute Income Hypothesis
- B.Relative Income Hypothesis
- C.Life Cycle Hypothesis
- D.Permanent Income Hypothesis
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Proposed by Franco Modigliani with Richard Brumberg and Albert Ando, it holds that a person plans consumption over a whole lifetime, using available resources, the return on wealth and age.
Read the full explanation →Which of the following statements about 'Saansad Adarsh Gram Yojana' (SAGY) is/are correct?
1. It comes under the Ministry of Parliamentary Affairs, Government of India.
2. It was launched in 2014 on the birth anniversary of Jayaprakash Narayan.
3. Mahatma Gandhi's vision of Gram Swaraj is the inspiration behind this scheme.
Select the answer using the codes given below :
- A.1 and 2 only
- B.2 and 3 only
- C.1, 2 and 3
- D.1 only
Show answer
SAGY is run by the Ministry of Rural Development, not the Ministry of Parliamentary Affairs, so statement 1 is wrong.
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