public finance fiscal & monetary policy section 4 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
- Bank rate
- Open market operations
- Public debt
- Public revenue
(a) 1 only
(b) 1 and 2
(c) 2, 3 and 4
(d) 1, 3 and 4
The correct answers to the above question in:
Answer: (b)
The RBI implements the monetary policy through open market operations, bank rate policy, reserve system, credit control policy, moral persuasion and through many other instruments.
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Read more public finance fiscal and monetary policy Based Indian Economy Questions and Answers
Question : 1
Match the following:
List I | List II |
1. 11th Finance Commission | A. 2002 |
2. 12th Finance Commission | B. 2007 |
3. 13th Finance Commission | C. 2013 |
4. 14th Finance Commission | D. 1998 |
a) C A D B
b) A B C D
c) B A C D
d) D A B C
Answer »Answer: (d)
11th Finance Commission was appointed in 1998, 12th in 2002, 13th in 2007 and 14th in 2013.
Question : 2
Ad Valorem tax is levied
a) according to value added by the finance ministry
b) according to value addition to a commodity
c) according to value added by the Government.
d) according to value given by producers
Answer »Answer: (d)
An ad valorem tax (Latin for "according to value") is a tax based on the value of the real estate or personal property. It is more common than a specific tax, a tax based on the quantity of an item, such as cents per kilogram, regardless of price.
It is levied on the basis of the value given by producers. So sometimes, the primary difficulty with such taxation, especially in the case of tariffs, is in establishing a satisfactory value figure.
Question : 3
Disinvestment in Public Sector is called
a) Privatisation
b) Globalisation
c) Liberalisation
d) Industrialisation
Answer »Answer: (a)
Privatization is the process of transferring ownership of a business, enterprise, agency, public service or public property from the public sector (a government) to the private sector, either to a business that operates for a profit or to a non-profit organization.
The term can also mean government outsourcing of services or functions to private firms, e.g. revenue collection, law enforcement, and prison management.
There are four main methods of privatization:
- Share issue privatization (SIP) - selling shares on the stock market;
- Asset sale privatization - selling an entire organization (or part of it) to a strategic investor, usually by auction or by using the Treuhand model;
- Voucher privatization - distributing shares of ownership to all citizens, usually for free or at a very low price; and
- Privatization from below - Start-up of new private businesses in formerly socialist countries.
Question : 4
Consider the following statements regarding the Fourteenth Finance Commission:
- It would recommend on sharing of tax proceeds between the centre and the states which will apply for a five-year period beginning April 1, 2014.
- To suggest steps for pricing of public utilities, such as electricity and water.
- It would review the state of finances, deficit and debt levels of the centre and states.
a) 1 and 3 only
b) 2 and 3 only
c) 1 and 2only
d) 1, 2 and 3
Answer »Answer: (b)
Fourteenth finance commission would recommend on sharing of tax proceeds between the Centre and the states which will apply for a five-year period beginning April 1, 2015.
It will suggest steps for the pricing of public utilities such as electricity and water. It would review the state of finances, deficit and debt levels of the Centre and states.
Question : 5
If the tax rate increases with the higher level of income, it shall be called
a) Regressive tax
b) Progressive tax
c) Proportional tax
d) Lump sum tax
Answer »Answer: (b)
A progressive tax is a tax by which the tax rate increases as the taxable base amount increases.” Progressive” describes a distribution effect on income or expenditure, referring to the way the rate progresses from low to high, where the average tax rate is less than the marginal tax rate.
It can be applied to individual taxes or to a tax system as a whole; a year, multi-year, or lifetime.
Progressive taxes attempt to reduce the tax incidence of people with a lower ability-to-pay, as they shift the incidence increasingly to those with a higher ability-to-pay.
Question : 6
With reference to ‘Central excise duty’, which of the following statements is/are correct?
- Commodities on which state governments impose excise duties are exempted from the central excise duty
- In recent years large number of goods has come under excise duty. Moreover, the rates of these duties have also been increasing
- Commodities which are produced within the country levied by central excise duty
a) 1 only
b) 3 only
c) 1 and 2
d) 1, 2 and 3
Answer »Answer: (d)
The commodities which are produced within the country are levied by central excise duty.
However, commodities on which state governments impose excise duties (e.g., liquor, drugs) are exempted from the central excise duty
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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