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
- Defence expenditure
- Subsidies
- All expenditures linked with the previous plan periods
- Interest payment
(a) 1 and 2
(b) 2 and 4
(c) 1 and 3
(d) 1, 2, 3 and 4
The correct answers to the above question in:
Answer: (d)
Non-plan expenditures include non-developmental expenditure (interest payment, subsidies, defence expenditure, civil administration), developmental expenditure and expenditure incurred on projects which remained unfinished in the earlier plans.
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Read more public finance fiscal and monetary policy Based Indian Economy Questions and Answers
Question : 1
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
Answer »Answer: (a)
Question : 2
A Black Market is a situation wherein
a) Goods are made available (sold) only after there is a rise in prices
b) Goods are sold secretly
c) Goods are loaded by the producers
d) Goods are sold at prices higher than what is fixed by the Government
Answer »Answer: (b)
Black market is the market in which illegal goods are traded. Goods acquired illegally take one of two price levels:
- they may be cheaper than legal market prices as the supplier does not have to pay for production costs or taxes; or
- they may be more expensive than legal market prices as the product is difficult to acquire or produce, dangerous to handle or not easily available legally.
Black-market transactions typically occur as a way for participants to avoid government price controls or taxes, conducting transactions 'under the table.'
So the most defining feature of black markets is that they have to be carried out secretly as they are illegal.
Question : 3
Match columns A and B wherein Column B defines Column A
Column A | Column B |
I. External debt | a. Includes small saving schemes, provident fund, reserve fund railways |
II. Internal debt | b. Includes loans from foreign countries and international financial institutions |
III. Other internal liabilities | c. Includes market loans from banks and financial institutions |
a) I-c, II-a, III-b
b) I-a, II-d, III-b
c) I-b, II-c, III-a
d) I-b, II-a, III-c
Answer »Answer: (c)
Internal debt, Other internal liabilities and External debt are three components of Public debt wherein Internal debt include market loans from banks and financial institutions, short-term borrowings on treasury bills and other bonds and certificates issued by the government.
External debt includes loans from foreign countries and international financial institutions like the World Bank, IMF, ADB, etc.
Other internal liabilities includes small saving schemes, provident fund, a reserve fund of the railways, post and telegraph on which the central government has to pay interest
Question : 4
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?
- Annual financial statement
- Fiscal policy
- Revenue budget
a) 1 only
b) 3 only
c) 2 only
d) 1, 2 and 3
Answer »Answer: (c)
It is used to achieve the objectives of balanced economic development, full employment or to establish a welfare state Economics takes care of various needs and wants of life
Question : 5
The banks are required to maintain a certain ratio between their cash in hand and total assets. This is called:
a) SBR (Statutory Bank Ratio)
b) CLR (Central Liquid Reserve)
c) SLR (Statutory Liquid Ratio)
d) CBR (Central Liquid Reserve)
Answer »Answer: (c)
SLR or the Statutory Liquidity Ratio is that ratio of total deposits which a commercial bank has to maintain with itself at any given point of time in the form of liquid assets like cash in hand, current balances with other banks and first-class securities which can be turned into cash (gold, cash or other approved securities).
This ratio at present is 25%. Some assets have to be in liquid form to take care of financial emergencies which every bank has to face. It regulates the credit growth in India.
Question : 6
Match columns A and B
Column A | Column B |
I. Planned expenditure | a. 2,21,733 Crores |
II. Non-Planned expenditure | b. 4,65,277 Crores |
III. Tax revenue | c. 13,12,200 Crores |
IV. Non-tax revenue | d. 9,19,842 Crores |
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
Answer »Answer: (c)
GET Fiscal Policy, Public Finance and Monetary Policy PRACTICE TEST EXERCISES
public finance fiscal & monetary policy section 1
public finance fiscal & monetary policy section 2
public finance fiscal & monetary policy section 3
public finance fiscal & monetary policy section 4
public finance fiscal & monetary policy section 5
public finance fiscal & monetary policy section 6
public finance fiscal & monetary policy section 7
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