taxes types, methods & budgeting process section 4 Practice Questions Answers Test with Solutions & More Shortcuts
Taxes Types, Methods & Budgeting Process PRACTICE TEST [6 - EXERCISES]
taxes types, methods & budgeting process section 1
taxes types, methods & budgeting process section 2
taxes types, methods & budgeting process section 3
taxes types, methods & budgeting process section 4
taxes types, methods & budgeting process section 5
taxes types, methods & budgeting process section 6
Question : 21
India’s external liabilities include which of the following?
- FDI investment in India
- FPI’s debt and equity investments in India
a) (ii) only
b) Both (i) & (ii)
c) (i) only
d) Neither (i) nor (ii)
Answer »Answer: (b)
If you have purchased shares/equity of a company then it is the liability of the company towards you.
India’s external liabilities include all the investments made in India either in the form of debt or equity. So, it will include everything FDI, FPI (debt and equity both), External Commercial Borrowing, Govt. of India borrowings from abroad, NRI deposits in India.
Total external liabilities are around 41% of GDP, in which both debt and equity are around equally distributed.
Question : 22
Which of the following statement is not true regarding "Outcome Budget":
a) It measures development outcomes of govt. programmes
b) It helps in better service delivery
c) It is not presented in parliament
d) It reduces unnecessary expenses
Answer »Answer: (c)
The “Outcome Budget” reflects the endeavour of the Government to convert "Outlays" into "Outcomes" by planning expenditure, fixing appropriate targets and quantifying deliverables of each scheme.
The “Outcome Budget” is an effort of the Government to be transparent and accountable to the people. The outcome budget is presented in the parliament.
Question : 23
Consider the following statements:
- Fiscal deficit increases aggregate demand in the economy
- Fiscal deficit is financed by borrowing from RBI
a) (ii) only
b) Both (i) & (ii)
c) (i) only
d) Neither (i) nor (ii)
Answer »Answer: (c)
When government incurs a fiscal deficit, the expenditure leads to an increase in total demand in the economy.
RBI is not allowed to lend to Government for the long term fiscal deficit bonds as per the FRBM Act 2003.
Question : 24
Consider the following statements regarding GST:
- The market price of a product will be the same all across India
- The producing State will not get GST
- It will allow seamless passage of input tax credit across States
- It will not lead to cascading effect of taxes
a) (ii) & (iv) only
b) (i), (iii) & (iv) only
c) (i) & (ii) only
d) (ii), (iii) & (iv) only
Answer »Answer: (d)
Question : 25
Consider the following statements regarding the Centrally Sponsored Schemes (CSCs):
- Central government gives grants to States to implement these schemes
- For the central government, most of the expenditure on CSCs is revenue expenditure
- Central government transfers the amount to either State Consolidated Fund or directly to State implementing agencies
a) (i) & (ii) only
b) (ii) & (iii) only
c) (i) only
d) All of the above
Answer »Answer: (a)
The central government gives grants to States to implement Centrally Sponsored Schemes (CSCs). And for Central Government (almost) all the expenditure as revenue expenditure
For example, the budgeted amount for the CSC (the core of the core) MGNREGA for the year 2020-21 is Rs. 61,500 crores and is revenue expenditure for Govt. of India. And since it is a GRANT from Govt. of India side to States, so it must be Revenue exp for Govt. of India.
But States can spend this as revenue or capital expenditure in the creation of assets. If States spend this on capital expenditure, then Centres "Effective Revenue Deficit" will get reduced by that amount.
Effective Revenue Deficit = Revenue Deficit - Grants given to States for capital expenditure
Till 2013-14, Funds for CSS were routed through two channels, the consolidated fund of the States and directly to the State/ District Level Autonomous Bodies/Implementing Agencies. (CSSs are a part of funds transfer to States/UTs).
In 2014-15, direct transfers to State implementing agencies were discontinued and all transfers to States including for the CSS are now routed through the Consolidated Funds of the States.
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Taxes Types, Methods & Budgeting Process 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
-
» Banking, Security Market & Insurance
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