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

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.

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.

Answer: (a)

It was introduced in France to overcome the cascading effect of several taxes-from raw material to the final product in the process of production

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An overdraft occurs when money is withdrawn from a bank account and the available balance goes below zero.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.”

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.

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.