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
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
The correct answers to the above question in:
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
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Read more public finance fiscal and monetary policy Based Indian Economy Questions and Answers
Question : 1
Custom duty is an instrument of
a) Fiscal Policy
b) Foreign Trade Policy
c) Monetary Policy
d) Industrial Policy
Answer »Answer: (b)
Custom duty is a tax on imports imposed on an ad valorem basis, i.e, fixed in the form of a percentage on the value of the commodity imported.
Question : 2
Which of the following is/are the components of Public debt?
- External debt
- Other internal liabilities
- Internal debt
a) 1 only
b) 3 only
c) 1 and 2
d) 1, 2 and 3
Answer »Answer: (d)
Public debt has three components -
- Internal debt,
- Other internal liabilities and
- External debt
Question : 3
A short-term government security paper is called
a) Treasury bill
b) Debenture
c) Share
d) Mutual fund
Answer »Answer: (a)
Treasury bills are instruments of short-term borrowing by the Government of India, issued as promissory notes under discount.
The interest received on them is the discount which is the difference between the price at which they are issued and their redemption value. They have assured yield and negligible risk of default. They are thus useful in managing short-term liquidity.
At present, the Government of India issues three types of treasury bills through auctions, namely, 91-day, 182-day and 364-day. There are no treasury bills issued by State Governments.
Question : 4
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 : 5
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 : 6
Which of the following are among the non-plan expenditures of the Government of India?
- 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
Answer »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.
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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