public finance fiscal & monetary policy section 3 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
- 72.85
- 97.25
- 46.89
- 27.14
(a) 1 only
(b) 3 only
(c) 2 only
(d) 3 and 4
The correct answers to the above question in:
Answer: (c)
The highest rate of income tax was 97.25, before 1975. Moderate rates of income tax encourage savings, faster growth and motivate voluntary compliance to tax regime. Over the years, the rates have been brought down
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Read more public finance fiscal and monetary policy Based Indian Economy Questions and Answers
Question : 1
Which one of the following was not stipulated in the Fisca Responsibility and Budget Management Act 2003?
a) Fixing government guarantees in any financial year as a percentage of GDP
b) Elimination of primary deficit by the end of the fiscal year 2008-09
c) Elimination of revenue deficit by the end of the fiscal year 2007-08
d) Non-borrowing by the Central Government from Reserve Bank of India except - under certain circumstances
Answer »Answer: (b)
Question : 2
Which of the following taxes is such which does not cause rise in price ?
a) Sales tax
b) Income tax
c) Import duty
d) Octoroi
Answer »Answer: (b)
The government of India imposes an income tax on taxable income of individuals, Hindu Undivided Families (HUFs), companies, firms, co-operative societies and trusts (identified as the body of individuals and association of persons) and any other artificial person.
Levy of tax is separate on each of the persons. The levy is governed by the Indian Income Tax Act, 1961. It does not lead to an increase in price as it is dependent on the income of individuals.
Question : 3
Which of the following statements is/are correct in terms of Direct and Indirect taxes?
- Excise duty and sales tax are examples of indirect taxes
- Taxes like income tax and property tax are direct taxes
- There is no difference between Direct and Indirect tax
a) 1 only
b) 1 and 2
c) 2 only
d) 1, 2 and 3
Answer »Answer: (b)
In the case of direct taxes the burden or ‘incidence’ has to be borne by the taxpayers themselves whereas in the case of an indirect tax, the burden can be shifted to another person
Question : 4
Which one of the following is not included in current revenue of the Union Government ?
a) Interest payments
b) Non-tax revenue
c) Tax revenue
d) Loans
Answer »Answer: (d)
Loans are not included in the current revenue of the Union Government.
Question : 5
In the context of Indian economy, which of the following is/are the purpose/purposes of ‘Statutory Reserve Requirements’?
- To enable the Central Bank to control the amount of advances the banks can create
- To make the people’s deposits with banks safe and liquid
- To prevent the commercial banks from making excessive profits
- To force the banks to have sufficient vault cash to meet their day-to-day requirements
a) 1 only
b) 2 and 3 only
c) 1 and 2 only
d) 1, 2, 3 and 4
Answer »Answer: (c)
Because Reserve Requirements are designed as “precautionary measures” and not to stop banks from “excessive” profit.
Question : 6
Which of the following is not a technique of Deficit financing?
- Internal Borrowings
- Counting Currency
- Printing Currency
- External aid and borrowings
a) 1 only
b) 2 and 3
c) 2 only
d) 1, 2, 3 and 4
Answer »Answer: (c)
There are three techniques of Deficit financing: Printing Currency, Internal Borrowings and External aid and borrowings. Counting Currency is not a technique of Deficit financing
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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
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public finance fiscal & monetary policy section 6
public finance fiscal & monetary policy section 7
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