Multiple Choice Questions on Buoyancy of a tax is defined as ndash ........ for General Studies (Level 1) Preparation

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Multiple Choice Questions

Buoyancy of a tax is defined as ndash ........

Indian Economy (Easy) Budgeting and Fiscal policy
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    Buoyancy of a tax is defined as–

    Percentage increase in tax revenue/percentage increase in tax base

    Incorrect Answer

    Increase in tax revenue/percentage increase in tax coverage

    Incorrect Answer

    Increase in tax revenue/increase in GDP

    Correct Answer

    Percentage increase in tax revenue/increase in tax coverage

    Incorrect Answer
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    Explanation:

    Tax buoyancy explains this relationship between the changes in government’s tax revenue growth and the changes in GDP.
    Tax buoyancy measured by dividing the growth in tax collections for each year by the nominal GDP growth. 

    By: Amit Kumar
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