public finance fiscal & monetary policy section 7 MCQ Questions & Answers Detailed Explanation

Answer: (a)

Corporation tax is the tax on income/profit of the organizations. In India, at one time, corporation tax was quite high

Answer: (a)

In 1996, govt introduced minimum Alternate tax (MAT) on companies which escaped the corporation tax net by using the provisions of exemptions, deductions incentives, deprecation and so on

Answer: (b)

In this book, titled ‘The Wealth of Nations, ‘Adam smith only gave four canons of taxation:

1. canon of equity;
2. canon of certainty;
3. canon of convenience; and
4. canon of the economy.

Answer: (b)

Non-plan expenditure covers

1. interest payments,
2. subsidies (mainly on food and fertilisers),
3. wage and salary payments to government employees,
4. grants to States and Union Territories governments,
5. pensions,
6. police,
7. economic services in various sectors,
8. defence,
9. loans to public enterprises,
10. loans to States, Union Territories and foreign governments.

Answer: (c)

A self-regulatory organization (SRO) is a nongovernmental organization that has the power to create and enforce industry regulations and standards.

The priority is to protect investors through the establishment of rules that promote ethics and equality

Answer: (c)

Fiscal deficit is budget deficit plus borrowings and other liabilities.

Fiscal deficit = Budget deficit + Government’s market borrowing and liabilities.

The fiscal deficit situation shows whether the government is spending beyond its income. India has, unfortunately, been a country prone to constant and high fiscal deficit situations.

A high fiscal deficit implies high indebtedness of the government and a deficit above 3% in the Indian context means an alarming situation for the government finances