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
(a) Direct Control
(b) Monetary Policy
(c) Fiscal Policy
(d) Trade Policy
The correct answers to the above question in:
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.
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Question : 1
Which of the following is the main aim of Indian Monetary Policy?
- Control inflationary pressure
- Boost economic development
a) 1 only
b) 1 and 2
c) 2 only
d) Neither 1 nor 2
Answer »Answer: (b)
Planned economic development adopted by India required an active monetary policy. The two stated aims of this policy were to boost economic development and control inflationary pressure
Question : 2
When the Reserve Bank of India reduces the Statutory Liquidity Ratio by 50 basis points, which of the following is likely to happen?
a) India’s GDP growth rate increases drastically
b) It may drastically reduce the liquidity to the banking system
c) Foreign Institutional Investors may bring more capital into our country
d) Scheduled Commercial Banks may cut their lending rates
Answer »Answer: (d)
When the Reserve Bank of India reduces the Statutory Liquidity Ratio by 50 basis points; the Scheduled Commercial Banks may cut their lending rates.
Question : 3
As per the Economic Survey 2007-2008, which one of the following is the largest source of revenue of the Government of India?
a) Excise Duty
b) Customs Duties
c) Personal income Tax
d) Corporation Tax
Answer »Answer: (d)
As per economic survey 2007-2008 corporation tax is the largest source of revenue of the Government of India.
Question : 4
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 : 5
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 : 6
Which of the following has been introduced as a very important component of Direct Tax code with the objective of preventing such deals and transactions?
- 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
Answer »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
GET Fiscal Policy, Public Finance and Monetary Policy PRACTICE TEST EXERCISES
public finance fiscal & monetary policy section 1
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