Practice Quiz set 7 - indian economy mcq Online Quiz (set-1) For All Competitive Exams
Q-1) Consider the following statements in regard to the goods and service tax: - If GST being levied then excise, VAT, Octroi, Service Tax, etc. will likely go away to make a single taxation system.
- GST in India will be divided between the state & centre.
Which of the above statements is/are correct?
(a)
(b)
(c)
(d)
It GST being levied then excise, VAT, Octroi, Service Tax etc will likely go away to make a single taxation system. GST in India will be divided between state & centre.
Q-2) Which of the following is the rate at which RBI lends to commercial banks? - Corporate rate
- Economy rate
- Bank rate
- Growth rate
(a)
(b)
(c)
(d)
Bank rate is an instrument of monetary policy which is the rate at which RBI lends to commercial banks
Q-3) Which of the following is the tax on income of the companies? - Corporation tax
- Reliable tax
- Compensatory tax
(a)
(b)
(c)
(d)
Corporation tax is the tax on income/profit of the organizations. In India, at one time, corporation tax was quite high
Q-4) In which of the following years, did govt introduce Minimum Alternate tax on companies? - 1996
- 1949
- 1972
- 2005
(a)
(b)
(c)
(d)
In 1996, govt introduced minimum Alternate tax (MAT) on companies which escaped the corporation tax net by using the provisions of exemptions, deductions incentives, deprecation and so on
Q-5) When price of a substitute of commodity ‘x’ falls, the demand for ‘x’ :
(a)
(b)
(c)
(d)
Cross Price Effect refers to the effect on the demand for a given commodity due to a change in the price of a substitute commodity. A change (increase or decrease) in the price of substitutes directly affects the demand for a given commodity.
When the price of substitute goods (say, coffee) rises, demand for the given commodity (say, tea) also rises at the same price.
It leads to a rightward shift in the demand curve of the given commodity. With the decrease in the price of substitute goods (coffee), demand for the given commodity (tea) also decreases. It shifts the demand curve of the given commodity towards the left.
Q-6) Which of the following taxes is the one by which the revenue collected rises proportionally with income?
- Regressive tax
- Progressive tax
- Corporate tax
- Proportional tax
(a)
(b)
(c)
(d)
Proportional tax is one by which the revenue collected rises proportionally with income.
A tax system could be made approximately proportional by having a uniform rate of income tax with very few exemptions, and indirect taxes levied at similar rates on as many goods and services as possible
Q-7) Which among the following is/are the main objective of Monetary Policy?
- Maintenance of domestic price level
- Reducing the impact of business cycles
- Stability of external value
(a)
(b)
(c)
(d)
Objectives of Monetary Policy are:
Stability of external value: Fluctuation in the exchange rate of a currency affects foreign trade and investment.
It is, therefore, important that the rate of exchange is maintained without violent fluctuations. Maintenance of domestic price level: Fluctuation in prices affects investment decisions.
It also leads to increasing income disparities. However, monetary policy alone cannot ensure the maintenance of domestic prices, as several other factors such as erratic monsoons, changes in tastes, fluctuation in world prices etc., affect domestic prices.
Reducing the impact of business cycles (slumps and booms) by manipulation of credit and interest policy. However, economists are not of the same opinion on whether business cycles are primarily caused by monetary factors.
Q-8) Which of the following is the tax imposed on commodities imported into India (import duty) or those exported from India (export duty)?
- Customs duty
- Central excise duty
- Incorporate duty
(a)
(b)
(c)
(d)
Customs duty is the tax imposed on commodities imported into India (import duty) or those exported from India (export duty).
Since imposing duties on exports reduced the competitive position of the country, the government withdrew export duties
Q-9) With reference to ‘Cash Reserve Ratio’, which of the following statements is/are correct?
- The RBI varies Cash Reserve Ratio to change the liquidity of the market
- CRR is subject to frequent changes as RBI intervenes from time to time to correct monetary or exchange rate imbalances
- CRR currently is 4%
- RBI is empowered to fix the CRR at a rate ranging between three per cent and 15 per cent
(a)
(b)
(c)
(d)
Every commercial bank is required to keep a certain percentage of its demand and time liabilities (deposits) with the RBI (either as cash or book balance).
The RBI varies this ratio to change the liquidity of the market. RBI is empowered to fix the CRR at a rate ranging between three per cent and 15 per cent.
Like the Bank Rate, CRR is also subject to frequent changes as RBI intervenes from time to time to correct monetary or exchange rate imbalances. This ratio, currently, is 4%
Q-10) The ‘Canons of Taxation’ were propounded by
(a)
(b)
(c)
(d)
Canons of Taxation were first originally laid down by economist Adam Smith in his famous book "The Wealth of Nations".
In this book, Adam smith only gave four canons of taxation:
- canon of equity;
- canon of certainty;
- canon of convenience; and
- canon of economy.