public finance fiscal & monetary policy section 1 MCQ Questions & Answers Detailed Explanation
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The following question based on Fiscal Policy, Public Finance and Monetary Policy topic of indian economy mcq
(a) the policy for dealing with IMF
(b) policy for regulating stock
(c) the volume of currency that banks should put in the economy
(d) the policy regarding taxation and expenditure
The correct answers to the above question in:
Answer: (d)
Practice Fiscal Policy, Public Finance and Monetary Policy (public finance fiscal & monetary policy section 1) Online Quiz
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Read more public finance fiscal and monetary policy Based Indian Economy Questions and Answers
Question : 1
Which among the following is/are the nodal agency for implementing the monetary policy?
- State Bank of India
- Reserve Bank of India
- Union Bank
a) 1 only
b) 2 only
c) 1 and 2
d) 1, 2 and 3
Answer »Answer: (b)
The Reserve Bank of India is the nodal agency for implementing the monetary policy. RBI has defined its monetary policy in terms of “adequate financing of economic growth and at the same time ensuring reasonable price stability”.
Question : 2
Which among the following statements is incorrect in regards to the Statutory liquid ratio?
- Statutory liquid ratio refers to the amount that the commercial banks require to maintain in the form of cash, or gold or govt. approved securities before providing credit to the customers
- Statutory liquid ratio is determined and maintained by RBI in order to control the expansion of bank credit
- At present, the SLR is 4%
- It is determined as percentage total demand and percentage of time liabilities
a) 1 only
b) 3 only
c) 1 and 2
d) None of the above
Answer »Answer: (b)
At present, the SLR is 18.00%
Question : 3
A change in fiscal policy affects the balance of payments through
a) Neither current account nor capital account
b) Both the current account and capital account
c) Only the current account
d) Only the capital account
Answer »Answer: (b)
Question : 4
Corporation tax is imposed by
a) State Government
b) State as well as Central Government
c) Central Government
d) Local Government
Answer »Answer: (b)
Corporation Tax is imposed by State as well as Central Government. Corporation tax is imposed on the income or capital of some types of legal entities. The taxes may also be referred to as income tax.
Question : 5
The incidence of Tax refers to
a) Who transfers the Tax burden ?
b) Who bears the burden of Tax ?
c) Who pays the Tax ?
d) How Taxes can be shifted ?
Answer »Answer: (b)
In economics, tax incidence is the analysis of the effect of a particular tax on the distribution of economic welfare. Tax incidence is said to "fall" upon the group that ultimately bears the burden of, or ultimately has to pay, the tax.
Question : 6
Which of the following statements is/are correct with reference to Primary deficit?
- India started using this term since 1997-98
- Primary deficit is fiscal deficit minus interest payments
- It shows the current state of government finances
a) 1 only
b) 3 only
c) 1 and 2
d) 1, 2 and 3
Answer »Answer: (d)
Primary deficit is fiscal deficit minus interest payments. India started using this term in 1997- 98.
Primary deficit is considered a very useful tool in helping bring more transparency in the government’s pattern of expenditure. It shows the current state of government finances.
If interest payments are deducted from a fiscal deficit, then it will obviously show a lesser deficit for that year as the interest payments are on account of loans taken in the past and not in the present year
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