public finance fiscal & monetary policy section 6 MCQ Questions & Answers Detailed Explanation

Question : 1

Which of the following refers to that part of deficit for which the government borrows from the RBI?

1. Primary deficit
2. Secondary deficit
3. Regulatory deficit
4. Monetised deficit

a) 1 only

b) 3 only

c) 1 and 2

d) 4 only

Question : 2

Mobilization of resources and channelizing the same for productive investment is the primary purpose of

1. Expenditure
2. VAT
3. Taxation
4. CRR

a) 1 only

b) 3 only

c) 2 only

d) 1, 2 and 4

Question : 3

In the context of economic liberalization, which of the following is/are the major themes of the fiscal policy?

1. A deliberate move to a regime of reasonable direct tax rates and better administration and enforcement
2. A systematic effort to simplify tax structure and tax laws

a) 1 only

b) 1 and 2

c) 2 only

d) Neither 1 nor 2

Question : 4

Which of the following refers to the set of measures adopted by the central bank?

1. Monetary policy
2. GAAR
3. Finance Commission
4. Black Money

a) 1 only

b) 3 only

c) 1 and 2

d) 4 only

Question : 5

With reference to the Finance Commission of India, which of the following statements is correct ?

a) It encourages the inflow of foreign capital for infrastructure development

b) None of the statements (a), (b) and (c) given above is correct in his context

c) It facilitates the proper distribution of finances among the Public Sector Undertakings

d) It ensures transparency in financial administration

Question : 6

Which one of the following statements regarding the levying, collecting, and distribution of Income Tax is correct?

a) The Union levies, collects, and distributes the proceeds of income tax between itself and the states.

b) Only the surcharge levied on income tax is shared between the Union and the states.

c) The Union levies, collects, and keeps all the proceeds of income tax itself.

d) The Union levies and collects the tax but all the proceeds are distributed among the states