public finance fiscal & monetary policy section 1 MCQ Questions & Answers Detailed Explanation

Question : 1

Which of the following statements is/are correct in regards to Revenue budget?

1. It consists of all capital receipts and expenditure such as domestic and foreign loans, loan repayment, foreign and etc
2. It consists of all current receipts, such as taxation, dividends of public sector units (PSU’s) and expenditure of the government

a) 1 only

b) 1 and 2

c) 2 only

d) Neither 1 nor 2

Question : 2

Fiscal responsibility and Budget Management Act was enacted in India in the year

a) 2003

b) 2002

c) 2007

d) 2005

Question : 3

If a government budgets for a surplus and there is an unexpected increase in the level of economic activity, which of the following is likely to occur?

a) There will be an increase in tax revenues and an increase in the budget surplus

b) There will be a decrease in tax revenues and a decrease in the budget surplus

c) There will be an increase in tax revenues and a decrease in the budget

d) There will be a decrease in tax revenues and an increase in the budget surplus

Question : 4

Which among the following taxes is not levied in India:

a) Minimum alternative tax

b) Dividend distribution tax

c) Capital gains tax

d) Estate duty

Question : 5

Which one of the following is the correct statement? Service tax is a/an:

a) direct tax levied by the Central Government.

b) indirect tax levied by the State Government.

c) indirect tax levied by the Central Government.

d) direct tax levied by the State Government.

Question : 6

Consider the following statements Full convertibility of the rupee may mean

1. Its free float with the international currencies.
2. Its direct exchange with any other international currency at any prescribed place inside and outside the country. 3. It acts just like any other international currency.

a) 1 and 2

b) 2 and 3

c) 1 and 3

d) 1, 2 and 3