Questions and answers for exam Preparation

MCQs

Total Questions : 163 | Page 7 of 17 pages

Question 61. Which of the following items had the highest share of expenditure in the overall budget of GoI in 2019-20?

Interest payment
Capital Expenditure
Salary and Pension
Explicit Subsidies

Discuss Question

Answer: Option A. -> Interest payment
Answer: (a)The following are the various expenditure of Govt. of India out of the total expenditure of Rs. 27 lakh crores in 2019-20. Salary and Pension Rs. 3.1 lakh croreInterest payment Rs. 6.6 lakh croreCapital Expenditure Rs. 3.5 lakh croreExplicit subsidies Rs. 3 lakh crore

Question 62. Which of the following taxes is levied and collected by the Union but distributed between Union and States?

Tax on income other than on agricultural income
Tax on railway fares and freight
Corporation Tax
Customs

Discuss Question

Answer: Option A. -> Tax on income other than on agricultural income
Answer: (a)

Question 63. Corporation Tax is on

sale of goods
income of a company
production of a company
stock of goods

Discuss Question

Answer: Option B. -> income of a company
Answer: (b)

Question 64. Which of the following is the characteristic of progressive tax?

Marginal tax rate should be increasing.
Marginal tax rates should be more than average tax rate.

Select the correct answer using the code given below:

Both 1 and 2
1 only
2 only
Neither 1 nor 2

Discuss Question

Answer: Option A. -> Both 1 and 2
Answer: (a)A progressive tax is a tax in which the tax rate increases as the taxable base amount increases Regarding progressive tax, marginal tax rate should be increasing and it should be more than average tax rate.

Question 65. Service tax was introduced in India on the recommendation of

Raja J. Chelliah Committee
Manmohan Singh Committee
Kelkar Committee
Yashwant Sinha Committee (E) None of the above/More than one of the above

Discuss Question

Answer: Option A. -> Raja J. Chelliah Committee
Answer: (a)

Question 66. The government can influence private sector expenditure by

taxation
subsidies
macro-economic policies
grants

Select the correct answer using the codes given below

1, 2 and 3
1, 2, 3 and 4
1, 2 and 4
3 and 4

Discuss Question

Answer: Option A. -> 1, 2 and 3
Answer: (a)The government influences private sector expenditure by taxation, subsidies and macro-economic policies.

Question 67. As per the FRBM Act 2003, Central Government shall endeavour to ensure that:

The general government debt shall not exceed 60% of GDP by 2024-25

The central government debt shall not exceed 40% of GDP by 2024-25

The central government shall not give additional guarantees on loans in excess of 0.5% of GDP in any financial year

Select the correct answer using the code given below:

(iii) only
(i) & (ii) only
(ii) only
All of the above

Discuss Question

Answer: Option D. -> All of the above
Answer: (d)
The N.K. Singh committee recommendations of Central Govt. debt of 40% of GDP and General Government (Centre and States combined) debt of 60% of GDP has been put under the FRBM Act 2003 by introducing an amendment through Finance Act 2018.
The additional guarantee of 0.5% of GDP was there from the beginning of the FRBM Act 2003.
Basically, the central government acts as a guarantor when PSUs borrow and States borrow from abroad.

Question 68. Which of the following statements are true regarding "fiscal stimulus":

It is a strategy to boost the sluggish economy

RBI pumps money into the economy

Government reduces subsidies

Public spending increases

Select the correct answer using the code given below:

(i), (ii), & (iv) only
(i), (iii) & (iv) only
(i) & (ii) only
(i) & (iv) only

Discuss Question

Answer: Option D. -> (i) & (iv) only
Answer: (d)
A ‘stimulus’ is an attempt by policymakers to kickstart a sluggish economy through a package of measures.
In the case of fiscal stimulus, the Government increases its spending and or slashes tax rates to put more money in the hands of consumers.
A monetary stimulus will see the central bank expanding money supply or reducing the cost of money (interest rates), to spur consumer spending.

Question 69. Which of the following should be considered for ‘Pigovian taxation’?

Consumption of cigarettes
Research for new technologies
Burning of fossil fuels
Restoration of lost cultural heritage

Choose the correct answer using the codes given below:

1, 2 and 3
1 and 3 only
2, 3 and 4 only
2 and 4 only

Discuss Question

Answer: Option B. -> 1 and 3 only
Answer: (b)A Pigovian tax is applied to a market activity that is generating negative externalities (costs for somebody else) like cigarette consumption, burning of fossil fuel.

Question 70. Consider the following regarding India’s external debt:

It is around 20% of GDP

Sovereign Debt is less than 5% of GDP

External Commercial Borrowings (ECB) has the highest share in India’s external debt

Select the correct answer using the code given below:

(iii) only
(i) & (iii) only
(i) & (ii) only
All of the above

Discuss Question

Answer: Option D. -> All of the above
Answer: (d)
As of June 2019, India’s external debt to GDP ratio stood at approximately 20%. And out of it, Sovereign debt (Govt. of India’s external debt) was around 3.5%.
Total India’s External Debt as of the end of June 2019 stood at $557 billion (20% of GDP) and out of it around more than 200 billion USD was external commercial borrowing (ECB).