Practice Quiz set 3 - indian economy mcq Online Quiz (set-1) For All Competitive Exams

Q-1)   Which of the following means rates of tax increase for increasing values or volumes on which the tax is levied
  1. Progressive tax
  2. Proportional tax
  3. Regressive tax
  4. Indirect tax

(a)

(b)

(c)

(d)

Explanation:

Income tax is a progressive tax as it has exemptions for very small incomes, low rates for the first slab of taxable income, and higher rates for the largest incomes

Q-2)   Which of the following is a type of the Public expenditure in India?
  1. Plan
  2. Non-plan

(a)

(b)

(c)

(d)

Q-3)   Who among the following appoints a Finance Commission under Article 280 of the Constitution?
  1. Prime Minister
  2. Finance Minister
  3. President
  4. Public

(a)

(b)

(c)

(d)

Explanation:

Under Article 280 of the Constitution, the President appoints a Finance Commission every five years

Q-4)   Which of the following is not a technique of Deficit financing?
  1. Internal Borrowings
  2. Counting Currency
  3. Printing Currency
  4. External aid and borrowings

(a)

(b)

(c)

(d)

Explanation:

There are three techniques of Deficit financing: Printing Currency, Internal Borrowings and External aid and borrowings. Counting Currency is not a technique of Deficit financing

Q-5)   The highest rate of income tax before 1975 was
  1. 72.85
  2. 97.25
  3. 46.89
  4. 27.14

(a)

(b)

(c)

(d)

Explanation:

The highest rate of income tax was 97.25, before 1975. Moderate rates of income tax encourage savings, faster growth and motivate voluntary compliance to tax regime. Over the years, the rates have been brought down

Q-6)   Which of the following statements is/are correct in terms of Direct and Indirect taxes?
  1. Excise duty and sales tax are examples of indirect taxes
  2. Taxes like income tax and property tax are direct taxes
  3. There is no difference between Direct and Indirect tax
Select the correct answer using the code given below:

(a)

(b)

(c)

(d)

Explanation:

In the case of direct taxes the burden or ‘incidence’ has to be borne by the taxpayers themselves whereas in the case of an indirect tax, the burden can be shifted to another person

Q-7)   Which of the following statements of the government gives expression to its fiscal policy?
  1. Annual financial statement
  2. Deficit financing
  3. Open capital account

(a)

(b)

(c)

(d)

Explanation:

Fiscal policy is expressed by the budget

Q-8)   After 1947, development and non-development expenditures have increased, the increase in the former being more. Nondevelopment expenditure involves
  1. interest payments
  2. subsidies
  3. defence
  4. irrigation

(a)

(b)

(c)

(d)

Q-9)   With reference to steps taken to achieve financial inclusion in India, consider the following statements:
  1. Scheduled commercial banks initiatives to masses.
  2. Formation of RRB
  3. Adoption of village by bank branches
Which of the statements given above is/are correct?

(a)

(b)

(c)

(d)

Explanation:

Financial inclusion in India includes initiative of scheduled commercial banks, formation of RRB and adoption of village by bank branches.

Q-10)   In the context of Indian economy, which of the following is/are the purpose/purposes of ‘Statutory Reserve Requirements’?
  1. To enable the Central Bank to control the amount of advances the banks can create
  2. To make the people’s deposits with banks safe and liquid
  3. To prevent the commercial banks from making excessive profits
  4. To force the banks to have sufficient vault cash to meet their day-to-day requirements
Select the correct answer using the code given below.

(a)

(b)

(c)

(d)

Explanation:

Because Reserve Requirements are designed as “precautionary measures” and not to stop banks from “excessive” profit.