public finance fiscal & monetary policy section 2 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
- General Avoidance Rules
- General Anti Affect Rules
- General Anti Avoidance Rules
- General Arm Affect Rules
(a) 1 only
(b) 3 only
(c) 2 only
(d) 1, 2 and 4
The correct answers to the above question in:
Answer: (b)
General Anti Avoidance Rules (GAAR) has been introduced as a very important component of the Direct Tax code with the objective of preventing such deals and transactions that are carried out to evade and avoid paying taxes.
In other words, GAAR seeks to prevent such transactions that are carried out by way of aggressive tax planning so as to avoid paying taxes
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Read more public finance fiscal and monetary policy Based Indian Economy Questions and Answers
Question : 1
When a large number of investors in a country transfer investments elsewhere because of disturbed economic conditions, it is called
a) Flight of Capital
b) Escape of Capital
c) Transfer of Capital
d) Outflow of Capital
Answer »Answer: (a)
Flight of capital refers to the movement of money from one investment to another in search of greater stability or increased returns.
Sometimes, it specifically refers to the movement of money from investments in one country to another in order to avoid country-specific risk (such as high inflation or political turmoil) or in search of higher returns.
Capital flight is seen most commonly in massive foreign capital outflows from a specific country, often at times of currency instability.
Question : 2
In India, the tax proceeds of which one of the following as a percentage of gross tax revenue has significantly declined in the last five years?
a) Service tax
b) Corporation tax
c) Personal income tax
d) Excise duty
Answer »Answer: (d)
The excise duty’s share in the total tax revenue, which was 41.3 per cent in 1992-93, declined to 25.1 per cent in 2006-07.
The customs duty’s share in the total tax revenue, which was 31.9 per cent in 1992- 93, fell to 17.5 per cent in 2006-07, as a result of massive structuring on excise and customs.
Question : 3
The ‘Interest Rate Policy’ is a component of
a) Direct Control
b) Monetary Policy
c) Fiscal Policy
d) Trade Policy
Answer »Answer: (b)
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability.
The official goals usually include relatively stable prices and low unemployment. The contraction of the monetary supply can be achieved indirectly by increasing the nominal interest rates.
Monetary authorities in different nations have differing levels of control of economy-wide interest rates.
Question : 4
Value-added means value of
a) goods and services less cost of intermediate goods and services
b) output at market prices
c) output at factor cost
d) goods and services less depreciation
Answer »Answer: (a)
Value added is an economic term to express the difference between the value of goods and the cost of materials or supplies that are used in producing them.
It is a measure of economic activity which eliminates the duplication inherent in the sales value figure which results from the use of products of some establishments as materials or services by others.
So it is of goods and services less cost of intermediate goods and services.
Question : 5
In an economy, the sectors are classified into public and private on the basis of
a) use of raw materials
b) nature of economic activities
c) employment conditions
d) ownership of enterprises
Answer »Answer: (d)
The classical breakdown of all economic sectors is: primary, secondary and tertiary. However, on the basis of ownership, the sectors are: business sector, private sector (privately run businesses), public sector (state sector) and voluntary sector.
Question : 6
Consider the following:
- Market borrowing
- Treasury bills
- Special securities issued to RBI
a) 1 only
b) 2 only
c) 1 and 2
d) 1, 2 and 3
Answer »Answer: (d)
Treasury Bills are money market instruments to finance the short term financial requirements of the Government of India. These are discounted securities and are issued at a discount to face value.
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public finance fiscal & monetary policy section 1
public finance fiscal & monetary policy section 2
public finance fiscal & monetary policy section 3
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public finance fiscal & monetary policy section 7
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