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

Question : 1

A part of National Debt known as External Debt is the amount

a) lent by its government to foreign government

b) lent by its citizens to foreign governments

c) borrowed by its citizens from abroad

d) borrowed by its government from abroad

Question : 2

Which of the following statements is/are correct as per Article 114(3) of the Constitution?

1. No money can be taken out of consolidated fund without the approval of the Rajya Sabha
2. No money can be taken out of consolidated fund without the approval of the Lok Sabha
3. Money can be taken out of consolidated fund without any approval

a) 1 only

b) 3 only

c) 2 only

d) 1, 2 and 3

Question : 3

Consider the following:

1. Market borrowing
2. Treasury bills
3. Special securities issued to RBI

a) 1 only

b) 2 only

c) 1 and 2

d) 1, 2 and 3

Question : 4

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 : 5

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 : 6

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