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
(a) Economic growth
(b) Regulation of inter-state trade
(c) Full employment
(d) Price stability
The correct answers to the above question in:
Answer: (b)
Practice Fiscal Policy, Public Finance and Monetary Policy (public finance fiscal & monetary policy section 5) Online Quiz
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Read more public finance fiscal and monetary policy Based Indian Economy Questions and Answers
Question : 1
Which of the following details can be obtained by Annual financial statement?
- Government forecasts of receipts and payments for the next year
- An outline of the results of the last financial year compared with the previous budget estimates
- Proposed changes in taxes and expenditure allocations
a) 1 only
b) 3 only
c) 1 and 2
d) 1, 2 and 3
Answer »Answer: (d)
Annual financial statement gives various information for the current, last and next year
Question : 2
Consider the following statements with regard to Statutory Liquidity Ratio (SLR)
- To meet SLR, Commercial banks can use cash only.
- SLR is maintained by the banks with themselves.
- 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
Answer »Answer: (a)
SLR used by bankers indicates the minimum percentage of deposits that the banks have to maintain in the form of gold, cash or other approved securities..
Question : 3
In India, deficit financing is used for raising resources for
a) economic development
b) reducing the foreign debt
c) redemption of public debt
d) adjusting the balance of payments
Answer »Answer: (a)
Deficit financing refers to the difference between expenditure and receipts. In public finance, it means the govt. is spending more than what it is earning.
Deficit financing is a necessary evil in a welfare state as the states often fail to generate tax revenue that is sufficient enough to take care of the expenditure of the state.
The basic intention behind deficit financing is to provide the necessary impetus to economic growth by artificial means.
Question : 4
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 : 5
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 : 6
Consider the following:
- 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
Answer »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.
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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