public finance fiscal & monetary policy section 7 Practice Questions Answers Test with Solutions & More Shortcuts
Fiscal Policy, Public Finance and Monetary Policy PRACTICE TEST [7 - 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
Question : 6
Which among the following is/are the main objective of Monetary Policy?
- Maintenance of domestic price level
- Reducing the impact of business cycles
- Stability of external value
a) 1 only
b) 3 only
c) 1 and 2
d) 1, 2 and 3
Answer »Answer: (d)
Objectives of Monetary Policy are:
Stability of external value: Fluctuation in the exchange rate of a currency affects foreign trade and investment.
It is, therefore, important that the rate of exchange is maintained without violent fluctuations. Maintenance of domestic price level: Fluctuation in prices affects investment decisions.
It also leads to increasing income disparities. However, monetary policy alone cannot ensure the maintenance of domestic prices, as several other factors such as erratic monsoons, changes in tastes, fluctuation in world prices etc., affect domestic prices.
Reducing the impact of business cycles (slumps and booms) by manipulation of credit and interest policy. However, economists are not of the same opinion on whether business cycles are primarily caused by monetary factors.
Question : 7 [SSC MTS 2013]
The New Economic Policy was introduced by:
a) Khrushchev
b) Stalin
c) Lenin
d) Kerensky
Answer »Answer: (c)
The New Economics Policy was introduced by Vladimir Ilyich Lenin (1870-1924). He was the founder of modern communist Russia. He was the leader of the Soviet Revolution of October 1917.
He liberated the country from the Czars and became Head of its first Communist Government (1917-1924). He dedicated himself to the cause of the workers’ revolution.
Question : 8
Which of the following is the tax imposed on commodities imported into India (import duty) or those exported from India (export duty)?
- Customs duty
- Central excise duty
- Incorporate duty
a) 1 only
b) 3 only
c) 2 only
d) 2 and 3
Answer »Answer: (a)
Customs duty is the tax imposed on commodities imported into India (import duty) or those exported from India (export duty).
Since imposing duties on exports reduced the competitive position of the country, the government withdrew export duties
Question : 9 [SSC SO 2003]
The incidence of sales tax falls on
a) Producers
b) Wholesale dealers
c) Consumers
d) Retail dealers
Answer »Answer: (c)
In economics, tax incidence is the analysis of the effect of a particular tax on the distribution of economic welfare.
Tax incidence is said to “fall” upon the group that ultimately bears the burden of, or ultimately has to pay, the tax. The key concept is that the tax incidence or tax burden does not depend on where the revenue is collected but on the price elasticity of demand and price elasticity of supply.
A tax on the sale of goods (sales tax, excise tax) will ultimately be paid by either the consumer or the firm based on elasticities, regardless of who the government actually levies the tax on. If the consumer ultimately pays the tax, it means that the tax incidence falls on the consumer.
If the firm ultimately pays the tax, it means that the tax incidence ultimately falls on the firm.
Question : 10 [SSC LDEO 2011]
Taxation is a tool of
a) Wage policy
b) Fiscal policy
c) Monetary policy
d) Price policy
Answer »Answer: (b)
In economics, fiscal policy is the use of government revenue collection (taxation) and expenditure (spending) to influence the economy. The two main instruments of fiscal policy are government taxation and expenditure.
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Fiscal Policy, Public Finance and Monetary Policy Shortcuts »
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indian economy MCQ CATEGORIES
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» Introduction to Indian Economy
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» Planning, Economic Development & Five year Plans
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» National Income & Human Development Index
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» Agriculture Sector, Subsidy and Food Processing
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» Industries, Manufacturing & Service Sectors
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» Inclusive growth, Sustainable development and employment
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» Poverty & Unemployment
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» Introduction to Micro Economics
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» Introduction to Macro Economics
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» Macro fundamentals, GDP, Investment, Growth
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» Demand & Supply, Profit Loss, Inflation & Price Index
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» Fiscal Policy, Public Finance and Monetary Policy
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» Money Supply, Banking and Financial Institutions
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» Taxes Types, Methods & Budgeting Process
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» Banking, Security Market & Insurance
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