introduction to indian economy section 10 MCQ Questions & Answers Detailed Explanation

Answer: (c)

Interest payments are the single largest item of expenditure.

As per the Economic Survey 2011-2012,

1. Interest payments constituted 3 per cent of India’s GDP in 2011-12.
2. Major subsidies constituted 1.5 per cent,
3. While defence expenditure comprised 1.1 per cent of India’s GDP in 2011-12.
4. Of the revenue expenditure in 2011-12, interest payments comprised 24.4 per cent;
5. Major subsidies: 12.3 per cent and Defence expenditure: 8.7 per cent.

Answer: (c)

The taxing powers of the central government encompass taxes on income (except agricultural income), excise on goods produced (other than alcohol), customs duties, and inter-state sale of goods.

The authority to levy a tax is coming from the Constitution which allocates the power to levy various taxes between the Centre and the State.

Answer: (d)

Expenditure incurred on the non-development plans is called non-plan expenditure which includes subsidies, interest payments etc.

Non-plan revenue expenditure is accounted for by,

1. interest payments,
2. subsidies,
3. wage and salary payments to government employees,
4. grants to States and Union Territories governments,
5. pensions,
6. police,
7. economic services in various sectors,
8. other general services such as tax collection,
9. social services, and grants to foreign governments.

Non-plan capital expenditure mainly includes,

1. defence,
2. loans to public enterprises,
3. loans to States, Union Territories and foreign governments.

Answer: (c)

As the economy develops, the share of the tertiary sector in the GDP increases.

The tertiary sector of the economy consists of activities where people offer their knowledge and time to improve productivity like,

1. telecommunication,
2. hospitality industry/tourism,
3. mass media,
4. healthcare/ hospitals,
5. information technology,
6. banking,
7. insurance,
8. investment management,
9. accountancy,
10. legal services,
11. consulting,
12. retail sales,
13. real estate, and
14. education.

As the economy develops people develop more skills and knowledge which they offer as services.

Answer: (b)

One of the important fiscal measures undertaken by governments to check inflation is to cut personal consumption expenditure. It is done by raising the rates of personal, corporate and commodity taxes and even levying new taxes.

The government can also reduce unnecessary expenditure on non-development activities in order to curb inflation.

Answer: (a)