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

Question : 1

Which is incorrect about convertibility?

a) Exchange rate should be based on forces of demand and supply.

b) RBI would become a direct player.

c) Exchange rate should show the strength of the economy.

d) Discourage black market transactions.

Question : 2

Consider the following statements in respect of Financial Commission:

1. It is mandatory to appoint a Finance Commission every five years.
2. Finance Commission lays down the principles governing grant-in-aid to states.
3. Finance Minister is the ex-officio Chairperson of the Finance Commission.
4. The award given by the Finance Commission is binding on Central and State governments.

a) 1, 2, 3 and 4

b) 1, 2 and 3

c) 1, 2 and 4

d) 1, 3 and 4

Question : 3

What is referred to as “Depository Services” ?

a) An advisory service to investors

b) A method of regulating stock exchanges

c) A new scheme of fixed deposits

d) An agency for safe-keeping of securities

Question : 4

Consider the following statements: The Indian rupee is fully convertible:

1. in respect of Current Account of Balance of payment
2. in respect of Capital Account of Balance of payment
3. into gold

a) 1 alone

b) 1 and 2

c) 3 alone

d) 1, 2 and 3

Question : 5

An instrument of qualitative credit control is

a) Open market operations

b) Credit rationing

c) variable reserve ratio

d) Bank rate

Question : 6

Where was VAT introduced?

1. France
2. USA
3. Australia
4. China

a) 1 only

b) 3 only

c) 1 and 2

d) 1, 2 and 3