Practice Quiz set 2 - indian economy mcq Online Quiz (set-1) For All Competitive Exams

Q-1)   Which of the following statements is/are correct as per Article 114(3) of the Constitution?
  1. No money can be taken out of consolidated fund without the approval of the Rajya Sabha
  2. No money can be taken out of consolidated fund without the approval of the Lok Sabha
  3. Money can be taken out of consolidated fund without any approval
Select the correct answer using the code given below:

(a)

(b)

(c)

(d)

Explanation:

Lok Sabha approval is mandatory in order to take out money from the Consolidated fund

Q-2)   Consider the following:
  1. Market borrowing
  2. Treasury bills
  3. Special securities issued to RBI
Which of these is/are components(s) of internal debt?

(a)

(b)

(c)

(d)

Explanation:

Treasury Bills are money market instruments to finance the short term financial requirements of the Government of India. These are discounted securities and are issued at a discount to face value.

Q-3)   Which of the following is the main aim of Indian Monetary Policy?
  1. Control inflationary pressure
  2. Boost economic development

(a)

(b)

(c)

(d)

Explanation:

Planned economic development adopted by India required an active monetary policy. The two stated aims of this policy were to boost economic development and control inflationary pressure

Q-4)   Which of the following refers to the use by the government of the various instruments such as taxation, expenditure and borrowing in order to achieve the objectives of balanced economic development etc?
  1. Annual financial statement
  2. Fiscal policy
  3. Revenue budget

(a)

(b)

(c)

(d)

Explanation:

It is used to achieve the objectives of balanced economic development, full employment or to establish a welfare state Economics takes care of various needs and wants of life

Q-5)   Which are the pre-requisites required by the Indian economy to implement convertibility of rupee on trade account as suggested by the Rangarajan Committee?
  1. There should be comfortable foreign exchange resources
  2. Low rate of inflation.
  3. Mechanism by which the government can pass on the changes in the price of imported goods to the consumers
  4. SLR and CRR must be low.

(a)

(b)

(c)

(d)

Q-6)   Which of the following are among the non-plan expenditures of the Government of India?
  1. Defence expenditure
  2. Subsidies
  3. All expenditures linked with the previous plan periods
  4. Interest payment
Codes:

(a)

(b)

(c)

(d)

Explanation:

Non-plan expenditures include non-developmental expenditure (interest payment, subsidies, defence expenditure, civil administration), developmental expenditure and expenditure incurred on projects which remained unfinished in the earlier plans.

Q-7)   Which of the following has been introduced as a very important component of Direct Tax code with the objective of preventing such deals and transactions?
  1. General Avoidance Rules
  2. General Anti Affect Rules
  3. General Anti Avoidance Rules
  4. General Arm Affect Rules

(a)

(b)

(c)

(d)

Explanation:

General Anti Avoidance Rules (GAAR) has been introduced as a very important component of the Direct Tax code with the objective of preventing such deals and transactions that are carried out to evade and avoid paying taxes.

In other words, GAAR seeks to prevent such transactions that are carried out by way of aggressive tax planning so as to avoid paying taxes

Q-8)   Which of the following is/are the components of Public debt?
  1. External debt
  2. Other internal liabilities
  3. Internal debt

(a)

(b)

(c)

(d)

Explanation:

Public debt has three components -

  1. Internal debt,
  2. Other internal liabilities and
  3. External debt

Q-9)   Which of the following refers to the RBI buying and selling eligible securities to regulate money supply?
  1. Repo and Reverse Repo
  2. Open Market Operations
  3. Response and Reverse Repo
  4. Relative Market Operations

(a)

(b)

(c)

(d)

Explanation:

Open Market Operations refers to the RBI buying and selling eligible securities to regulate the money supply. Traditionally RBI was not resorting to this method.

However, after the large inflow of foreign funds since 1991, RBI has had to step in to sterilize the flow to avoid excess liquidity

Q-10)   As per the Economic Survey 2007-2008, which one of the following is the largest source of revenue of the Government of India?

(a)

(b)

(c)

(d)

Explanation:

As per economic survey 2007-2008 corporation tax is the largest source of revenue of the Government of India.