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

Answer: (d)

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

Answer: (c)

Open Market Operations refers to the RBI buying and selling eligible securities to regulate the money supply. Traditionally RBI was not resorting to this method.

However, after the large inflow of foreign funds since 1991, RBI has had to step in to sterilize the flow to avoid excess liquidity

Answer: (c)

Goods and services tax (GST) will subsume many central and state taxes, such as excise duty, service tax, valueadded tax, sales tax and luxury tax. Income tax is a direct tax, so it is not under GST.

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: (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.

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.