public finance fiscal & monetary policy section 6 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) Total production
(b) Total demand
(c) Total Income
(d) Total savings
The correct answers to the above question in:
Answer: (d)
Capital formation refers to capital accumulation, referring to the total “stock of capital” that has been formed, or to the growth of this total capital stock.
It also refers to a measure of the net additions to the (physical) capital stock of a country (or an economic sector) in an accounting interval, or, a measure of the amount by which the total physical capital stock increased during an accounting period.
Total capital formation” in national accounting equals net fixed capital investment, plus the increase in the value of inventories held, plus (net) lending to foreign countries, during an accounting period (a year or a quarter).
Capital is said to be “formed” when savings are utilized for investment purposes, often investment in production.
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Read more public finance fiscal and monetary policy Based Indian Economy Questions and Answers
Question : 1
The aim of Differentiated Interest Scheme was to provide concessional loans to _______.
a) big exports
b) Public Sector Industries
c) weaker section of the society
d) Public Limited Companies
Answer »Answer: (c)
The Differential Rate of Interest Scheme, formulated in March 1972, offers financial assistance at concessional rate of interest @ 4% to those who intend taking up any productive activity and has been tailored for persons whose income is very low. This scheme is meant for:
• Persons belonging to SC/STs, Adivasis engaged in agricultural operations and/ or allied activities;
• Persons engaged in collection of forest products, fodder and selling these in markets;
• Persons engaged in Village and Cottage Industries on a very small scale; etc.
Question : 2
Which one of the following is the most appropriate reason for Inequalities in Income ?
a) Differences in Ability
b) Lack of opportunities
c) Racial factors
d) Inheritance from family Environment
Answer »Answer: (b)
Joseph E. Stiglitz, a Nobel laureate in economics, has pointed how lack of opportunity leads to widening of inequality. It leads to concentration of income and wealth at the top, the hollowing out of the middle, and increasing poverty at the bottom.
Question : 3
Which of the following statements is incorrect about Repo and Reverse Repo?
- At present, the repo rate is 11.75%
- At present, the reverse repo rate is 5.75%
- Repo rate is the rate at which RBI lends to commercial banks
- Reverse Repo is the rate at which RBI borrows from commercial banks
a) 1 only
b) 1, 3 and 4
c) 1 and 2
d) None of the above
Answer »Answer: (a)
At present, the repo rate is 4.00%
Question : 4
Regressive tax can be defined as
- The one by which the revenue collected rises proportionally with income
- The rates of tax increase for increasing values or volumes on which the tax is levied
- The one where the proportion of tax paid falls as income rises
a) 1 only
b) 3 only
c) 2 only
d) 1, 2 and 3
Answer »Answer: (b)
Regressive tax is one where the proportion of tax paid falls as income rises. The most regressive tax is a poll tax, levied at a fixed rate per person regardless of income.
A tax system can be made regressive by having indirect taxes levied at relatively high rates on goods heavily consumed by the poor
Question : 5
New capital issue is placed in
a) Black market
b) Grey market
c) Secondary market
d) Primary market
Answer »Answer: (d)
The primary market is that part of the capital markets that deals with the issuance of new securities.
Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue. This is the market for new long term equity capital.
The primary market is the market where the securities are sold for the first time. Therefore it is also called the new issue market (NIM).
Question : 6
Fiscal policy means
a) policy relating to financial matters of international trade
b) policy relating to government spending, taxation and borrowing
c) policy relating to money and banking in a country
d) policy relating to non-banking financial institutions
Answer »Answer: (b)
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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