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

Question : 1

Which among the following statements is incorrect in regards to the Statutory liquid ratio?

1. 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
2. Statutory liquid ratio is determined and maintained by RBI in order to control the expansion of bank credit
3. At present, the SLR is 4%
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

Question : 2

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

Question : 3

Which of the following is /are among the noticeable features of the recommendations of the Thirteenth Finance Commission?

1. A design for the Goods and Services Tax, and a compensation package linked to adherence to the proposed design.
2. A design for the creation of lakhs of jobs in the next ten years in consonance with India’s demographic dividend.
3. Devolution of a specified share of central taxes to local bodies as grants.

a) 1 only

b) 1 and 3

c) 2 and 3

d) 1, 2 and 3

Question : 4

Fiscal Policy is concerned with

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

Question : 5

Corporation tax is imposed by

a) State Government

b) State as well as Central Government

c) Central Government

d) Local Government

Question : 6

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 ?