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

Question : 1

Which of the following refers to the use by the government of the various instruments such as taxation, expenditure and borrowing in order to achieve the objectives of balanced economic development etc?

1. Annual financial statement
2. Fiscal policy
3. Revenue budget

a) 1 only

b) 3 only

c) 2 only

d) 1, 2 and 3

Question : 2

Which of the following are among the non-plan expenditures of the Government of India?

1. Defence expenditure
2. Subsidies
3. All expenditures linked with the previous plan periods
4. Interest payment

a) 1 and 2

b) 2 and 4

c) 1 and 3

d) 1, 2, 3 and 4

Question : 3

Fiscal stability means that, other things remaining constant

a) debt-GDP ratio declines over time

b) debt increases but GDP remains the same

c) both debt and GDP decrease over time

d) debt and GDP increase at the same rate

Question : 4

Match columns A and B 

a) I-c, II-a, III-b, IV-d

b) I-a, II-c, III-d, IV-b

c) I-b, II-c, III-d, IV-a

d) I-d, II-c, III-d, IV-a

Question : 5

Which are the pre-requisites required by the Indian economy to implement convertibility of rupee on trade account as suggested by the Rangarajan Committee?

1. There should be comfortable foreign exchange resources
2. Low rate of inflation.
3. Mechanism by which the government can pass on the changes in the price of imported goods to the consumers
4. SLR and CRR must be low.

a) 1 and 2

b) 1 and 4

c) 1, 2 and 3

d) All of the above

Question : 6

Which of the following taxes is not collected by the Central Government ?

a) Excise duty

b) Customs duty

c) Income tax

d) Professional tax