MCQs
Total Questions : 163
| Page 3 of 17 pages
Answer: Option D. -> Borrowing by NTPC for its power generation projects
Answer: (d)
When the Centre does not have the budgetary resources to fund its various schemes/programmes then it asks its agencies to borrow and fund these programmes. For example, for the public distribution scheme, FCI borrows from National Small Savings Fund (NSSF).
Similarly, HUDCO and NHB borrow to fund the affordable scheme of the government, NABARD borrows for irrigation and rural housing. Rural Electrification Corporation (REC) borrows for rural electrification. Ideally, the Centre should borrow for these schemes but it asks its various agencies to take the loan in their name which is then not shown in the Centre’s budget.
These Off-Budget Borrowings (also called extra-budgetary resources) allows the Centre to reduce the immediate impact on the fiscal, as the repayments made by the government are calibrated over many years.
These however add to the overall public debt of Govt. of India. CAG has expressed concern over it and if these off-budget borrowings would have been included in the budget then the Centre’s fiscal deficit would have been more than 5% rather than 3.8% in 2019-20.
Answer: (d)
When the Centre does not have the budgetary resources to fund its various schemes/programmes then it asks its agencies to borrow and fund these programmes. For example, for the public distribution scheme, FCI borrows from National Small Savings Fund (NSSF).
Similarly, HUDCO and NHB borrow to fund the affordable scheme of the government, NABARD borrows for irrigation and rural housing. Rural Electrification Corporation (REC) borrows for rural electrification. Ideally, the Centre should borrow for these schemes but it asks its various agencies to take the loan in their name which is then not shown in the Centre’s budget.
These Off-Budget Borrowings (also called extra-budgetary resources) allows the Centre to reduce the immediate impact on the fiscal, as the repayments made by the government are calibrated over many years.
These however add to the overall public debt of Govt. of India. CAG has expressed concern over it and if these off-budget borrowings would have been included in the budget then the Centre’s fiscal deficit would have been more than 5% rather than 3.8% in 2019-20.
Answer: Option C. -> 1, 2, 3, 4
Answer: (c)
Income Tax (1860);
Expenditure Tax (1956);
Value Added Tax (1996-97) &
Fringe Benefits Tax (2005).
Answer: (c)
Income Tax (1860);
Expenditure Tax (1956);
Value Added Tax (1996-97) &
Fringe Benefits Tax (2005).
Answer: Option C. -> The Union levies, collects and distributes the proceeds of income tax between itself and the states
Answer: (c)
Answer: (c)
Answer: Option B. -> 1 and 2
Answer: (b)Customs duties-Export duty and import duty are levied by Central Government.
Answer: (b)Customs duties-Export duty and import duty are levied by Central Government.
Question 25. Which of the following figures are presented as part of the Budget presentation in Parliament?
Select the correct answer using the code given below:
- Budgeted receipts and expenses for the next Financial Year (FY)
- Budgeted receipts and expenses for the current FY
- Revised receipts and expenses for the current FY
- Actual receipts and expenses for the last FY
Select the correct answer using the code given below:
Answer: Option D. -> All of the above
Answer: (d)
Answer: (d)
Answer: Option B. -> 1957
Answer: (b)
Answer: (b)
Answer: Option C. -> (i) only
Answer: (c)
Public Debt of Govt. of India is Central Government's internal and external debt.
Treasury Bill is Govt. of India's debt because these are bonds issued by GoI.
ECB and FDI relates to companies and PSUs. And NRI deposits are in banks and it is not a debt of Govt. of India.
So, only (i) statement is correct.
Answer: (c)
Public Debt of Govt. of India is Central Government's internal and external debt.
Treasury Bill is Govt. of India's debt because these are bonds issued by GoI.
ECB and FDI relates to companies and PSUs. And NRI deposits are in banks and it is not a debt of Govt. of India.
So, only (i) statement is correct.
Question 28. Which of the following statements are true regarding “Deficit Financing”?
Select the correct answer using the code given below:
- It raises aggregate demand in the economy
- It may result in inflation in the economy
- It is used as a developmental tool by developing countries
- It is done by issuing government bonds
Select the correct answer using the code given below:
Answer: Option D. -> All of the above
Answer: (d)
Deficit financing is the budgetary situation where expenditure is higher than the receipts.
The expenditure revenue gap is financed by either printing of currency or through borrowing. Nowadays most governments both in the developed and developing world are having deficit budgets and these deficits are often financed through borrowing.
Hence the fiscal deficit is the ideal indicator of deficit financing. Deficit financing is very useful in developing countries like India because of revenue scarcity and development expenditure needs.
Since government spends more than receipts, it leads to an increase in demand and may result in inflation also.
Answer: (d)
Deficit financing is the budgetary situation where expenditure is higher than the receipts.
The expenditure revenue gap is financed by either printing of currency or through borrowing. Nowadays most governments both in the developed and developing world are having deficit budgets and these deficits are often financed through borrowing.
Hence the fiscal deficit is the ideal indicator of deficit financing. Deficit financing is very useful in developing countries like India because of revenue scarcity and development expenditure needs.
Since government spends more than receipts, it leads to an increase in demand and may result in inflation also.
Question 29. With reference to the ‘Prohibition of Benami Property Transactions Act, 1988 (PBPT Act)’, consider the following statements:
Which of the statements given above is/are correct?
- A property transaction is not treated as a Benami transaction if the owner of the property is not aware of the transaction.
- Properties held by Benami are liable for confiscation by the Government.
- The Act provides for three authorities for investigations but does not provide for any appellate mechanism.
Which of the statements given above is/are correct?
Answer: Option C. -> 2 only
Answer: (c)
The act provides is an appellate tribunal, and they’re required to finish the case within one year.
So #3 is wrong, by elimination, we are left with A and B.
So, C is most appropriate because IT dept (therefore, Government) can seize the Benami properties.
Answer: (c)
The act provides is an appellate tribunal, and they’re required to finish the case within one year.
So #3 is wrong, by elimination, we are left with A and B.
So, C is most appropriate because IT dept (therefore, Government) can seize the Benami properties.
Answer: Option D. -> (i), (ii) & (iii) only
Answer: (d)
When government postpones its fiscal deficit target or when the fiscal deficit increases then the interest rate in the economy goes up because the government borrows more (demand-supply concept).
When the interest rate in the economy goes up bond prices come down and the return/yield on bonds goes up.
Answer: (d)
When government postpones its fiscal deficit target or when the fiscal deficit increases then the interest rate in the economy goes up because the government borrows more (demand-supply concept).
When the interest rate in the economy goes up bond prices come down and the return/yield on bonds goes up.
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