Question

which one of the following is not a method for redeeming public debt a) sinking fund b)captial levy c) terminal annuities d)grants-in-aid
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Answer 1

Answer:

Option D (grants-in-aid) is the correct answer

Explanation:

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Answer 2

Option d is the correct answer.

Grants in aid is not a method for redeeming public debt.

1. Grants in aid is the fund that is given by central government to local or state governments for specific projects. These are not supposed to be payed back.
2. Capital levy, terminal annuities and sinking fund all are methods for redeeming public debt.
3. In capital levy a special one time tax is imposed on the capital specially during wartime or any unforeseen circumstances.
4. Sinking fund is a fund in which a portion of revenue of each year is kept aside for payment of debt.
5. Terminal annuity implies annual repayment of debt by the government.