public finance fiscal & monetary policy section 5 MCQ Questions & Answers Detailed Explanation

Question : 1

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

Question : 2

Which of the following details can be obtained by Annual financial statement?

1. Government forecasts of receipts and payments for the next year
2. An outline of the results of the last financial year compared with the previous budget estimates
3. Proposed changes in taxes and expenditure allocations

a) 1 only

b) 3 only

c) 1 and 2

d) 1, 2 and 3

Question : 3

Consider the following statements with regard to Statutory Liquidity Ratio (SLR)

1. To meet SLR, Commercial banks can use cash only.
2. SLR is maintained by the banks with themselves.
3. SLR restricts the banks leverage in pumping more money into the economy.

a) 2 and 3

b) 1 and 3

c) 1, 2 and 3

d) only 2

Question : 4

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.

Question : 5

Consider the following:

1. Income tax
2. Fringe tax
3. Interest tax
4. Security transaction tax (STT)

a) 1, 2 and 3

b) 2 and 3

c) 1 and 2

d) 1, 2, 3 and 4

Question : 6

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