public finance fiscal & monetary policy section 4 MCQ Questions & Answers Detailed Explanation

Answer: (b)

In economics, a transfer payment (or government transfer or simply transfer) is a redistribution of income in the market system.

These payments are considered to be exhaustive because they do not directly absorb resources or create output. In other words, the transfer is made without any exchange of goods or services.

Examples of certain transfer payments include welfare (financial aid), interest on public debt, social security, and government making subsidies for certain businesses (firms).

Answer: (d)

It is a service offered by a securities depository under which the depository maintains book accounts recording the ownership of securities held on behalf of the depository’s participants, for eligible securities.

Answer: (a)

Answer: (a)

Answer: (c)

The DEA or the Department of Economic Affairs is also responsible for preparation and presentation to the Parliament of Central Budget and the Budgets for the State Governments under President’s Rule and Union Territory Administration.

Answer: (b)

A higher international interest rate will decrease FDI since it means a higher cost of funds in the international market and vice versa. Interest rate is a measure of the cost of capital.

A higher interest rate implies more costly investment and, therefore, the higher the interest rate, the more it is likely to defer FDI and the relationship between FDI and the interest rate is expected to be negative.

Love and Lage-Hidalgo (2000) and Erdal and Tatoglu (22002), amongst others, find that an increase in the interest rate leads to a decrease in FDI. Interest rate and FDI can both be the cause and effect of others.