Practice Quiz set 4 - indian economy mcq Online Quiz (set-1) For All Competitive Exams

Q-1)   Choose the correct one from the following.
  1. Revenue deficit = Revenue expenditure – Revenue receipts
  2. Revenue deficit = Revenue receipts – Revenue expenditure
  3. Revenue deficit = Revenue receipts – Total expenditure
  4. Revenue deficit = Revenue expenditure – Total receipts

(a)

(b)

(c)

(d)

Explanation:

Revenue deficit means the excess of current revenue expenditure over current revenue receipts. Revenue deficit indicates that the government cannot meet its current expenditure from its current revenue. Revenue deficit= Revenue expenditure – Revenue receipts

Q-2)   Which of the following is the process of bridging the gap between the revenue and expenditure?
  1. Multiple financing
  2. Bridge financing
  3. Accurate financing
  4. Deficit financing

(a)

(b)

(c)

(d)

Explanation:

The process of bridging the gap between the revenue and expenditure is called deficit financing. In other words, Deficit financing refers to the ways in which the budgetary gap is financed

Q-3)   Increase in net RBI credit for Central Government represents
  1. Budgetary Deficit
  2. Revenue Deficit
  3. Fiscal Deficit
  4. Monetised Deficit
Choose the right option

(a)

(b)

(c)

(d)

Q-4)   With reference to Indian economy, consider the following.
  1. Bank rate
  2. Open market operations
  3. Public debt
  4. Public revenue
Which of the above is/are component/ components of Monetary Policy?

(a)

(b)

(c)

(d)

Explanation:

The RBI implements the monetary policy through open market operations, bank rate policy, reserve system, credit control policy, moral persuasion and through many other instruments.

Q-5)   Which of the following may lead to a pressure on the government for an upward revision in salaries of government employees?
  1. Internal Borrowings
  2. External aid and borrowings
  3. Counting Currency
  4. Printing currency

(a)

(b)

(c)

(d)

Explanation:

Printing currency is usually the last resort for the government in managing its deficit. It might help the government in times of need but it should be undertaken only in case of extreme necessity as it has many damaging effects on the economy.

It increases inflation proportionally. It may also lead to pressure on the government for an upward revision in salaries of government employees, which in turn will lead to an increase of government’s expenditure, further necessitating printing of currency and more inflation

Q-6)   Which of the following precautions has to be taken by a country going for foreign aid?
  1. Keeping foreign aid strings-free
  2. Keeping the borrowing level low so that country does not fall into a debt trap

(a)

(b)

(c)

(d)

Explanation:

A country going for foreign aid has to take several precautions.

However, two major precautions are: Keeping the borrowing level low so that country does not fall into a debt trap, and Keeping foreign aid strings-free

Q-7)   With reference to ‘Central excise duty’, which of the following statements is/are correct?
  1. Commodities on which state governments impose excise duties are exempted from the central excise duty
  2. In recent years large number of goods has come under excise duty. Moreover, the rates of these duties have also been increasing
  3. Commodities which are produced within the country levied by central excise duty

(a)

(b)

(c)

(d)

Explanation:

The commodities which are produced within the country are levied by central excise duty.

However, commodities on which state governments impose excise duties (e.g., liquor, drugs) are exempted from the central excise duty

Q-8)   Match the following:
List I List II
1. 11th Finance Commission A. 2002
2. 12th Finance Commission B. 2007
3. 13th Finance Commission C. 2013
4. 14th Finance Commission D. 1998
Select the answer using the following codes: 1 2 3 4

(a)

(b)

(c)

(d)

Explanation:

11th Finance Commission was appointed in 1998, 12th in 2002, 13th in 2007 and 14th in 2013.

Q-9)   Which of the following subjects does not figure in the Concurrent List of our Constitution ?

(a)

(b)

(c)

(d)

Explanation:

The Concurrent List or List-III is a list of 47 items given in Part XI of the Constitution of India, concerned with relations between the Union and States. Stock exchanges and futures markets come under the Union List.

Q-10)   Consider the following statements regarding the Fourteenth Finance Commission:
  1. It would recommend on sharing of tax proceeds between the centre and the states which will apply for a five-year period beginning April 1, 2014.
  2. To suggest steps for pricing of public utilities, such as electricity and water.
  3. It would review the state of finances, deficit and debt levels of the centre and states.
Which of the statements given above is/are correct?

(a)

(b)

(c)

(d)

Explanation:

Fourteenth finance commission would recommend on sharing of tax proceeds between the Centre and the states which will apply for a five-year period beginning April 1, 2015.

It will suggest steps for the pricing of public utilities such as electricity and water. It would review the state of finances, deficit and debt levels of the Centre and states.