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

Answer: (d)

A professional tax, also known as an occupation tax or a professional privilege tax, is a tax that a professional must pay to receive the right to practice a professional service.

Many state and local governments collect professional tax, and a professional who has clients in more than one state may owe professional taxes in several states.

Answer: (c)

Answer: (c)

Answer: (c)

Leasing is a process by which a firm can obtain the use of certain fixed assets for which it must pay a series of contractual, periodic, tax-deductible payments.

Equipment leasing is a financing alternative for businesses to acquire needed machinery while saving precious operating capital. Leasing provides opportunities to use available money to operate assets that can make more money over time.

There are many distinct differences between buying and leasing, regardless if such a transaction or agreement applies to property, machinery, equipment or other assets.

The difference lies in that a lease is conceptually very similar to the principle of “borrowing.” The ownership of the leased property (be it land, equipment, merchandise, or etc.) is not transferred under the terms of the lease agreement.

Answer: (b)

In India, Black money refers to funds earned on the black market, on which income and other taxes have not been paid. Black money leads to black liquidity which is immune to any monetary fiscal policy.

It can move around in the economy creating excess demand in several vulnerable sectors of the economy. Of particular relevance in this context is a policy dominated by sector-wise credit rationing in order to maintain inter-sectoral balances.

The cost of credit is one part of such a policy. So, in nutshell, the existence of a parallel economy erodes the effectiveness of monetary policies.

Answer: (a)

The term ‘exit’ is the obverse of the term ‘entry’ into the industry. It refers to the right or ability of an industrial unit to withdraw from or leave an industry or in other words to close down.

The proposal to introduce an exit policy was first mooted in 1991 when it was felt that without labour market flexibility, efficient industrialization would be difficult to achieve.

The need for such a policy arises as a result of modernization, technology up-gradation, restructuring as well as the closure of industrial units. Such a policy will allow employers to shift workers from one unit to another and also retrench excess labour.