Practice Indian economy mcq - indian economy mcq Online Quiz (set-2) For All Competitive Exams

During 2002-03, average growth rate of agriculture and allied sectors negative.

Motor Vehicle tax is not a source of tax revenue for the Central Government in India. It is type of revenue part of State tax.

Net national product at market price is the market value of the output of final goods and services produced at the current price in one year of a country.

If we subtract the depreciation charges from the gross national product, we get the net national product at market price.

Net national product at market price = Gross national product at market price - Depreciation.

With the introduction of Economic liberalisation requirement for government licensing has been abolished except for a small list of strategic and potentially hazardous industries and a few industries which are reserved for the small scale sector.

For most industries however industrial investment has been effectively delicensed and investors are free to set up new units or expand existing units subject only to environmental clearances.

Full employment refers to a situation in which every able-bodied person who is willing to work at the prevailing rate of wages is, in fact, employed.

It implies an absence of involuntary unemployment which occurs when those who are willing to work at the going wage rate do not get work.

A dual economy is the existence of two separate economic sectors within one country, divided by different levels of development, technology, and different patterns of demand.

The concept was originally created by Julius Herman Boeke to describe the coexistence of modern and traditional economic sectors in a colonial economy.

Consider an example to understand GST in a better way (GST rate 18%):

Consumer 100 + 118 300 + 54 Tax = Rs.18 Tax

= Rs. 36 (Rs.54 - Rs.18) (CGST = 9, SGST = 9) (CGST = 18, SGST = 18) Govt. Govt.

In the above example, A is doing a value addition of Rs. 100 and selling the product to B in Rs. 118 and paying Rs. 18 GST to the government. B is doing a value addition of Rs. 200 and is paying Rs. 36 GST to the government. Since GST is a value-added tax, so every entity in the value chain shall pay the government tax only on their value addition.

Practically B shows the invoice of Rs. 354 to the government and pays a tax of Rs. 54 to the government but when it produces the tax receipt obtained from A to the government worth Rs. 18 then government credits/refunds Rs. 18 to B. This is called Input Tax Credit Mechanism as the taxes paid by B on the purchase of inputs from A i.e. Rs. 18 is credited by the government back to B.

Since there is only one tax i.e. GST and credits of input taxes paid at each stage is available in the subsequent stage of value addition across India (whereas in the case of VAT input credit was available only within the State), hence it will prevent the dreaded cascading effect of taxes. This is the basic feature and advantage of GST.

Important aspects regarding the implementation of GST:

If A belongs to one State (say UP) and B and the consumer belong to another State (say Bihar) then all the State GST i.e. Rs. 9 and Rs. 18 (=Rs. 27) will be passed on to the State where the product is being consumed by the consumer

i.e. Bihar and the State where A belongs i.e. UP will not get any SGST.

This is why GST is also called consumption-based and destination-based tax as all the SGST is passed on to the consuming State i.e. Bihar.

If A and B belong to different states then rather than GST, IGST will be levied by the Centre on the transaction between A and B which is again equal to the sum of CGST and SGST and ultimately distributed to the Centre and the consuming State equally. Practically everything remains the same, only the tax name changes to Integrated GST (IGST)

If B, rather than selling the product to the consumer in India, exports the products then IGST will be imposed as IGST is levied on inter-State supplies. The GST paid in the entire value chain and the IGST paid at the border is refunded/credited back to the suppliers. So effectively there is no tax on exports and hence we say that exports are "zero-rated" supplies. Supplies to SEZs are also zero-rated.

If a trader is importing a product into India then he will have to pay first customs duty and then IGST on the imported product as imports are also considered to be InterState supplies.

Deflation is defined as a fall in the general price level of goods and services. It is a negative rate of inflation. It means the value of money increases rather than decreases.

The Price Stabilization Fund (PSF) was set up in 2014-15 under the Department of Agriculture, Cooperation & Famers Welfare (DAC&FW) to help regulate the price volatility of important agri-horticultural commodities like onion, potatoes and pulses were also added subsequently.

The PSF scheme was transferred from DAC&FW to the Department of Consumer Affairs (DOCA) w.e.f. 1st April 2016.

The scheme provides for maintaining a strategic buffer of aforementioned commodities for subsequent calibrated release to moderate price volatility and discourage hoarding and unscrupulous speculation. For building such stock, the scheme promotes direct purchase from farmers/farmers’ associations at farm gate/Mandi.

The PSF is utilized for granting interest-free advance of working capital to Central Agencies like NAFED (National Agricultural Cooperative Marketing Federation of India Ltd.) and SFAC (Small Farmers Agri-business Consortium), State/UT Governments/Agencies to undertake market intervention operations.

Apart from domestic procurement from farmers/wholesale mandis, import may also be undertaken with support from the Fund.

French economist Leon Walras put forward the General Equilibrium Theory in his pioneering 1874 work ‘Elements of Pure Economics.

The theory attempts to explain the functioning of economic markets as a whole, rather than as individual phenomena. It tried to show how and why all free markets tended toward equilibrium in the long run.

Agricultural income tax to states in India is assigned by the Constitution of India.

The agency responsible for it is the Finance Commission whose function is the distribution of net proceeds of taxes between the Centre and the States, to be divided as per their respective contributions to the taxes.

Currency Swap Agreement: US India $1 = Rs. 70 In US, the US company can raise loans at 6%, but for an Indian company doing business in US, the loan rate is 8%.

So, the US company will raise a loan of $1 billion at 6% and give it to the Indian company working in US.

The Indian company will keep on paying the interest rate at 6% and after the term ends, it will give back the $1 billion amount to the US company.

In India, the Indian company can raise loans at 9%, but for a US company doing business in India, the loan rate is 11%.

So, the Indian company will raise a loan of Rs. 70 billion at 9% and give it to the US company working in India. The US company will keep on paying the interest rate 9% and after the term ends, it will give back the Rs. 70 billion amount to the Indian company.

A currency swap is an agreement in which the two parties (multinational· corporations/governments) exchange the principle amount of a loan (and the interest) in one currency for the principle and interest in another currency.

At the start of the swap, the equivalent principle amounts are exchanged at the prevailing rate. At the end of the swap period, the principle amounts are swapped back at either the· prevailing rate or at a pre-agreed rate such as the rate of the original exchange of principle amount.

Currency swaps are used to obtain foreign currency loans at a better interest rate or· as a method of hedging transaction risk on foreign currency loans. Currency swap agreements can be at the government and the company level both.

Nutrient Based Subsidy" is applicable for Phosphatic and Potassic (P&K) fertilizers only and not for Urea which is a Nitrogenous fertilizer. Govt. fixes the subsidy annually based on the per kg of nutrient present in the fertilizer.

As the subsidy given by the Govt. is fixed, so the market price of the fertilizers varies with the change in international prices.

So, market prices are not regulated by the government rather it is decontrolled.

Cooperative Banks operate on no profit no loss basis, and they operate in all sectors including the agriculture sector.

NABARD is not a Cooperative Bank. National Bank for Agriculture and Rural Development (NABARD) is an apex development bank in India.

Jawahar Rozgar Yojana (JRY) is a poverty alleviation scheme, which falls under the category of works program for the creation of supplementary employment opportunities.

Its implementation vests with the Union government, though Gram Panchayats were to be involved in the planning and implementation of the programme.

The Act requires the government to lay before the parliament three policy statements in each financial year namely Medium Term Fiscal Policy Statement; Fiscal Policy Strategy Statement and Macroeconomic Framework Policy Statement.

Primarily there are three methods of measuring national income. The methods are product method, income method and expenditure method.

Product method is given by Dr Alfred Marshall, income method by A.C. Pigou and expenditure method by Dr Irving Fisher.

The ‘Investment Method’ is used for trading properties where evidence of rates is slight, such as hotels, cinema, car parks and etc.

Worldwide, the first known instance of an SEZ seems to have been an industrial park set up in Puerto Rico in 1947 to attract investment from the US mainland.

In the 1960s, Ireland and Taiwan followed suit, but in the 1980s China made the SEZs gain global currency with its largest SEZ being the metropolis of Shenzhen.

OTCEI was incorporated in 1990 as a Section 25 company under the Companies Act 1956 and is recognized as a stock exchange under Section 4 of the Securities Contracts Regulation Act, 1956.

The Exchange was set up to aid enterprising promoters in raising finance for new projects in a cost-effective manner and to provide investors with a transparent & efficient mode of trading.

OTCEI (over the counter exchange of India) is based in Mumbai.

It is India’s first exchange for small companies as well as the first screen-based nationwide stock exchange in India.

Founded in: 1990

Chairman: S.C. Bhargava