public finance fiscal & monetary policy section 5 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
- Income tax
- Fringe tax
- Interest tax
- Security transaction tax (STT)
(a) 1, 2 and 3
(b) 2 and 3
(c) 1 and 2
(d) 1, 2, 3 and 4
The correct answers to the above question in:
Answer: (a)
Income tax, fringe tax, interest tax all are direct taxes paid directly to the government by the persons on whom it is imposed.
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Read more public finance fiscal and monetary policy Based Indian Economy Questions and Answers
Question : 1
What is Value Added Tax (VAT) ?
a) A new tax to be imposed on the producers of capital goods
b) A new initiative taken by the Government to increase the tax-burden of high income groups
c) A simple, transparent, easy to pay tax imposed on consumers
d) A single tax that replaces State taxes like, surcharge, turnover tax, etc.
Answer »Answer: (d)
A value-added tax (VAT) is a form of consumption tax. A VAT is like a sales tax in that ultimately only the end consumer is taxed. It differs from the sales tax in that, with the latter, the tax is collected and remitted to the government only once, at the point of purchase by the end consumer.
VAT comes under the single tax system based primarily or exclusively on one tax, typically chosen for its special properties. Most of the Indian States have replaced Sales tax with Value Added Tax (VAT) from 1 April 2005.
VAT is imposed on goods only and not services and it has replaced sales tax.
Question : 2
The tax levied on gross sales revenue from business transactions is called
a) Corporation Tax
b) Sales Tax
c) Turnover Tax
d) Capital Gains Tax
Answer »Answer: (c)
A turnover tax is similar to a sales tax or a VAT, with the difference that it taxes intermediate and possibly capital goods. It is charged on gross sales revenue from business transactions.
Unlike a sales tax, which is levied only on gross value at the point of retail sale, a turnover tax is levied on all intermediate transactions between businesses leading to and including the final sale.
Question : 3
Which one of the following is not the objective of fiscal policy of government of India?
a) Economic growth
b) Regulation of inter-state trade
c) Full employment
d) Price stability
Answer »Answer: (b)
Question : 4
A high fiscal deficit is a cause for concern for any economy. What does it denote?
a) It is a measure of the borrowing of an economy
b) it means the lack of liquidity and earnings for the economy
c) It is total expenditure less total receipts excluding borrowings
d) It reflects the decrease in tax collections for the year
Answer »Answer: (c)
Question : 5
With reference to the Indian Public Finance, consider the following statements.
- External liabilities reported in the Union Budget are based on historical exchange rates.
- The continued high borrowing has kept the real interest rates high in the economy.
- The upward trend in the ratio of Fiscal Deficit to GDP in recent years has an adverse effect on private investments.
- Interest payments is the single largest component of the non-plan revenue expenditure of the Union Government.
a) 1, 2 and 3
b) 2, 3 and 4
c) 1 and 4
d) 1, 2, 3 and 4
Answer »Answer: (b)
Question : 6
Excess of total expenditure over total revenues is termed as
- Revenue deficit
- Fiscal deficit
- Budget deficit
- Overall deficit
a) 1 only
b) 3 only
c) 1 and 2
d) 4 only
Answer »Answer: (b)
Budget deficit is the overall deficit i.e., the excess of total expenditure over total revenues. It includes both capital and revenue items in receipts and expenditure. Traditionally, deficit financing in Indian budgets had meant filling this gap
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public finance fiscal & monetary policy section 1
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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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