public finance fiscal & monetary policy section 7 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
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
The correct answers to the above question in:
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
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Question : 1
The non-expenditure costs which arise when the producing firm itself owns and supplies certain factors of production are
a) Replacement costs
b) Original costs
c) Explicit costs
d) Implicit costs
Answer »Answer: (d)
In economics, an implicit is the opportunity cost equal to what a firm must give up in order to use factors which it neither purchases nor hires.
It is the opposite of an explicit cost, which is borne directly. In other words, an implicit cost is any cost that results from using an asset instead of renting, selling, or lending it. These are costs a business incurs without actually spending money.
Question : 2
The theory of “Maximum Social Advantage” in Public Finance was given by
a) Dalten
b) Musgrave
c) Robbins
d) Findley
Answer »Answer: (a)
The 'Principle of Maximum Social Advantage' was introduced by British economist Hugh Dalton.
According to Dalton, “The best system of public finance is that which secures the maximum social advantage from the operations which it conducts."
Question : 3
Which one of the following is part of fiscal policy?
a) Interest rate policy
b) Foreign policy
c) Production policy
d) Tax policy
Answer »Answer: (d)
Question : 4
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 : 5
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 : 6
VAT is imposed:
a) On all stages between production and sale
b) On first stage of production
c) Directly on Consumer
d) On final stage of production
Answer »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.
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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