public finance fiscal & monetary policy section 7 MCQ Questions & Answers Detailed Explanation
MOST IMPORTANT indian economy mcq - 7 EXERCISES
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The following question based on Fiscal Policy, Public Finance and Monetary Policy topic of indian economy mcq
(a) On all stages between production and sale
(b) On first stage of production
(c) Directly on Consumer
(d) On final stage of production
The correct answers to the above question in:
Answer: (a)
Value Added Tax (VAT) is imposed on the value added to each commodity by a firm during all stages of production and distribution.
In simple terms, it is a fee assessed against businesses at each step of the production and distribution process, usually whenever a product is resold or value is added to it.
Value-added taxation in India was introduced as an indirect value-added tax (VAT) into the Indian taxation system from 1 April 2005.
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Read more public finance fiscal and monetary policy Based Indian Economy Questions and Answers
Question : 1
List I | List II |
A. Partial convertibility | 1. Unified exchange rate, applied for export and import of goods only, visible transaction of BoP. |
B. Convertibility on trade account | 2. Currency can be converted on all accounts |
C. Convertibility on current account | 3. 60% of foreign exchange to be converted at market rates and rest at the official rate. |
D. Full Convertibility | 4. Full convertibility in all visible and invisible transactions of goods and services.Codes: A B C D |
a) A-1, B-2, C-3, D-4
b) A-4, B-2, C-1, D-3
c) A-3, B-1, C-4, D-2
d) A-1, B-4, C-3, D-2
Answer »Answer: (c)
Question : 2
A tax is said to be regressive when its burden falls
a) None of these
b) more heavily on the poor than on the rich
c) less heavily on the poor than on the rich
d) equally on the poor as on the rich
Answer »Answer: (b)
In terms of individual income and wealth, a regressive tax imposes a greater burden on the poor than on the rich.
There is an inverse relationship between the tax rate and the taxpayer’s ability to pay, as measured by assets, consumption, or income.
These taxes tend to reduce the tax burden of the well-to-do, as they shift the burden disproportionately to the needy.
Question : 3
Match columns A and B wherein Column B defines Column A Column B I. a. II. b. III. c.
Column A | Column B |
I. Capital expenditure | 1. Includes interest payments, subsidies, defence expenditure |
II. Plan expenditure | 2. Includes loans to PSUs, states, foreign governments |
III. Revenue expenditure | 3. Includes expenditure on central plans such as agriculture, rural development, irrigation, transport, communications, environment and welfare schemes |
a) I-c, II-a, III-b
b) I-a, II-d, III-b
c) I-b, II-c, III-a
d) I-b, II-a, III-c
Answer »Answer: (c)
All asset creating and productive expenditure is part of plan expenditure, and all non-productive, consumptive and non- asset-building expenditure is part of non-plan expenditure.
Non-plan expenditure is further divided into revenue expenditure and capital expenditure
Question : 4
Globalisation does not include
a) disinvestment of Public Sector Equity
b) free flow of FDI
c) reduction in import duties
d) abolition of import licensing
Answer »Answer: (a)
Question : 5
Consider the following recommendations of The Shome Committee which were appointed to look into the guidelines of General Anti-Avoidance Rules (GAAR):
- To correct anomalies in the statutes of tax laws
- To protect the tax base from abusive tax planning schemes with the purpose to avoid tax
- To correct technical/procedural defects that impair a substantive law
a) 3 only
b) 2 only
c) 1 only
d) 1, 2 and 3
Answer »Answer: (d)
The Shome Committee which was appointed to look into the guidelines of General Anti-Avoidance Rules (GAAR) has recommended retrospective application of tax law only in rarest of rare cases.
It recommends:
- To correct anomalies in tax laws,
- to protect the tax base from abusive tax planning schemes with a purpose
- to avoid tax
- to correct technical/ procedural defects.
Question : 6
Which of the following refers to the freedom for firms and residents to freely buy into overseas assets?
- Capital Account Consumption
- Capital Across Convertibility
- Capital Account Continuity
- Capital Account Convertibility
a) 1 only
b) 3 only
c) 1 and 2
d) 4 only
Answer »Answer: (d)
A currency is said to be convertible when it can be freely exchanged for another currency at market rates.
Transaction of current account includes dealing with payments relating to foreign trade, travel and other services. Capital account deals with transactions in financial assets.
While India has made the Indian rupee fully convertible on the current account, it is yet to accept capital account convertibility as a goal.
Broadly, capital account convertibility would mean freedom for firms and residents to freely buy into overseas assets such as equity, bonds, property, and acquire ownership of overseas firms besides free repatriation of proceeds by foreign investors
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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