Practice Quiz set 5 - indian economy mcq Online Quiz (set-1) For All Competitive Exams
Q-1) Which among the following are true for Central Sales Tax? - It is levied on interstate trade.
- It is levied in the Union Territories.
- It is levied in the SEZ.
Select the correct answer from the codes given below.
(a)
(b)
(c)
(d)
Q-2) Consider the following taxes. - Corporation Tax
- Customs Duty
- Wealth Tax
- Excise Duty
Which of these is/are indirect taxes?
(a)
(b)
(c)
(d)
Q-3) The Minimum Alternate Tax (MAT) was introduced in the Budget of the Government of India for the year
(a)
(b)
(c)
(d)
Q-4) Which UT/State’s per capita SGDP has been taken as the reference by the Fifteenth Finance Commission for calculating the ‘income distance’?
(a)
(b)
(c)
(d)
‘Income distance’ is calculated as the difference between the per capita gross state domestic product (GSDP) of the state from that of the state with the highest per capita GSDP. This ensures that states with less income get a higher share in order to allow them to provide services comparable to those provided by the richer ones.
The XV FC used the per capita GSDP of Haryana as the reference for calculating the income distance, and has given it a weight of 45%, down from the 50% assigned by the XIV FC.
Q-5) What has been kept under the purview of Goods and Services Tax (GST)?
(a)
(b)
(c)
(d)
Q-6) Consider the following statements regarding Forex Reserves:
- The country’s Forex Reserves fully covers the external debt
- The country’s Forex Reserves fully covers its one-year imports of goods and services
Select the correct answer using the code given below:
(a)
(b)
(c)
(d)
The country’s forex reserves as of the end of Feb 2020 stood at $476 billion, but India’s external debt crossed 557 billion USD as of June 2019 (and it is still increasing with time).
So, at any point in time, if we want to pay off the complete external debt, it is not possible as forex reserve is only $476 billion.
(As all external debt is denominated in foreign currencies and hardly $1 billion is in rupee debt (Masala bonds), so it has to be paid only through our Forex reserve).
Since the ratio of Forex to External debt is $476/ 557 = 85%, that means our forex reserves don’t cover the external debt.
If it would have been greater than 100% then we say that our external debt is fully covered (with forex reserves).
The country’s one-year imports are around $630 billion (2018-19). So again, our forex reserves don’t fully cover imports also.
Q-7) Which of the following is associated with fiscal policy?
(a)
(b)
(c)
(d)
Fiscal policy is the use of government revenue collection (taxation) and expenditure (spending) to influence the economy. The two main instruments of fiscal policy are changes in the level and composition of taxation and government spending in various sectors.
Q-8) Consider the following statements regarding the presentation of the Budget in the Parliament:
- Finance Bill is introduced on the very first day when the Finance Minister presents Budget in the Parliament
- Appropriation Bill is introduced after the voting on demand for grants is over
Select the correct answer using the code given below:
(a)
(b)
(c)
(d)
The budget is discussed in two stages - the general discussion followed by a detailed discussion.
1st Feb 31st March Detailed Discussion On 1st Feb, the Finance bill is also introduced after the budget presentation.
Q-9) Consider the following statements regarding inverted duty structure in GST:
- It is the result of several tax slabs in our GST structure
- It creates problem in claiming input tax credit
Select the correct answer using the code given below:
(a)
(b)
(c)
(d)
The term ‘Inverted Duty Structure’ refers to a situation where the rate of tax on inputs purchased is more than the rate of tax on outward supplies (or finished products).
This is the result of several tax rates of 0%, 5%, 12%, 18% and 28% in our GST structure.
For example, on "Paper" we have a 5% GST rate but on Books (a finished product) we have a 0% GST rate, so it is a classic case of inverted duty structure.
This creates a problem in claiming input tax credit as the supplier in the chain pays taxes on inputs purchased but he does not collect taxes from the outward supplies.
Q-10) Which of the following can finance the Govt. of India’s fiscal deficit?
- Foreign Direct Investment (FDI)
- Foreign Portfolio Investment (FPI)
Select the correct answer using the code given below:
(a)
(b)
(c)
(d)
The fiscal Deficit is govt of India’s borrowing either from domestic sources or from abroad.
So, when Govt. of India issues bonds to borrow money, it can be purchased by FPI’s also. But FDI is into equity/shares and not in debt instruments.