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) an overdraft
(b) an ordinary loan
(c) a personal loan
(d) discounting a bill of exchange
The correct answers to the above question in:
Answer: (a)
Overdrafts are an extension of credit from a lending institution when an account reaches zero.
An overdraft allows the individual to continue withdrawing money even if the account has no funds in it. Basically, the bank allows people to borrow a set amount of money.
An overdraft occurs when money is withdrawn from a bank account and the available balance goes below zero. In this situation, the account is said to be “overdrawn.”
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Read more public finance fiscal and monetary policy Based Indian Economy Questions and Answers
Question : 1
By whom was the autonomous investment separated from induced investment ?
a) Adam Smith
b) Malthus
c) Schumpeter
d) Joan Robinson
Answer »Answer: (c)
Under his concept of creative destruction, Schumpeter distinguished between two types of investment that he called induced and autonomous.
Induced investment arose from the discrepancy between supply and demand and autonomous investment from resources and technology created by the entrepreneurs.
He also introduced a concept of "saving up" which is different from saving in the neoclassical growth models. Saving up constituted the part of the output that is withheld from investment and consumption.
Question : 2
Which of the following is an indirect tax ?
a) Estate Duty
b) Excise Duty
c) Capital Gains Tax
d) Wealth Tax
Answer »Answer: (b)
Some examples of indirect taxes include value added tax, excise duty, sales tax, stamp duty and custom duty levied on imports. These are taxes levied by the state on expenditure and consumption, but not on property or income.
Question : 3
According to the provisions of the Fiscal Responsibility and Budget Management [FRBM]. Act, 2003 and FRBM Rules, 2004, the Government is under obligation to present three statements before the parliament along with the Annual Budget. Which one of the following is not one of them?
a) Medium-term Fiscal Policy Statement
b) Fiscal Policy Strategy Statement
c) Macroeconomic Framework Statement
d) Statement showing Short term Fiscal Policy
Answer »Answer: (d)
The Act requires the government to lay before the parliament three policy statements in each financial year namely Medium Term Fiscal Policy Statement; Fiscal Policy Strategy Statement and Macroeconomic Framework Policy Statement.
Question : 4
‘Gold’ is mainly related to
a) Regional market
b) National market
c) Local market
d) International market
Answer »Answer: (d)
Gold is mainly related to the international market as of all the precious metals, it is the most popular as an investment.
Gold has been used throughout history as money and has been a relative standard for currency equivalents specific to economic regions or countries, until recent times.
The gold price has shown a long term correlation with the price of crude oil.
Question : 5
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 : 6
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..
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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