public finance fiscal & monetary policy section 2 MCQ Questions & Answers Detailed Explanation

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

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.

Answer: (d)

As per economic survey 2007-2008 corporation tax is the largest source of revenue of the Government of India.

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.

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.

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