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MCQs

Total Questions : 217 | Page 5 of 22 pages
Question 41. New capital issue is placed in
  1.    Black market
  2.    Grey market
  3.    Secondary market
  4.    Primary market
 Discuss Question
Answer: Option D. -> Primary market
Answer: (d)
The primary market is that part of the capital markets that deals with the issuance of new securities.
Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue. This is the market for new long term equity capital.
The primary market is the market where the securities are sold for the first time. Therefore it is also called the new issue market (NIM).
Question 42. Regressive tax can be defined as

  1. The one by which the revenue collected rises proportionally with income

  2. The rates of tax increase for increasing values or volumes on which the tax is levied

  3. The one where the proportion of tax paid falls as income rises


  1.    1 only
  2.    3 only
  3.    2 only
  4.    1, 2 and 3
 Discuss Question
Answer: Option B. -> 3 only
Answer: (b)
Regressive tax is one where the proportion of tax paid falls as income rises. The most regressive tax is a poll tax, levied at a fixed rate per person regardless of income.
A tax system can be made regressive by having indirect taxes levied at relatively high rates on goods heavily consumed by the poor
Question 43. Capital formation in an economy depends on
  1.    Total production
  2.    Total demand
  3.    Total Income
  4.    Total savings
 Discuss Question
Answer: Option D. -> Total savings
Answer: (d)
Capital formation refers to capital accumulation, referring to the total “stock of capital” that has been formed, or to the growth of this total capital stock.
It also refers to a measure of the net additions to the (physical) capital stock of a country (or an economic sector) in an accounting interval, or, a measure of the amount by which the total physical capital stock increased during an accounting period.
Total capital formation” in national accounting equals net fixed capital investment, plus the increase in the value of inventories held, plus (net) lending to foreign countries, during an accounting period (a year or a quarter).
Capital is said to be “formed” when savings are utilized for investment purposes, often investment in production.
Question 44. The aim of Differentiated Interest Scheme was to provide concessional loans to _______.
  1.    big exports
  2.    Public Sector Industries
  3.    weaker section of the society
  4.    Public Limited Companies
 Discuss Question
Answer: Option C. -> weaker section of the society
Answer: (c)The Differential Rate of Interest Scheme, formulated in March 1972, offers financial assistance at concessional rate of interest @ 4% to those who intend taking up any productive activity and has been tailored for persons whose income is very low. This scheme is meant for:• Persons belonging to SC/STs, Adivasis engaged in agricultural operations and/ or allied activities;• Persons engaged in collection of forest products, fodder and selling these in markets;• Persons engaged in Village and Cottage Industries on a very small scale; etc.
Question 45. The process of budget making after re-evaluating every item of expenditure in every financial year is known as-
  1.    Performance Budgeting
  2.    Fresh Budgeting
  3.    Deficit Budgeting
  4.    Zero Based Budgeting
 Discuss Question
Answer: Option D. -> Zero Based Budgeting
Answer: (d)
Question 46. Which one of the following is the most appropriate reason for Inequalities in Income ?
  1.    Differences in Ability
  2.    Lack of opportunities
  3.    Racial factors
  4.    Inheritance from family Environment
 Discuss Question
Answer: Option B. -> Lack of opportunities
Answer: (b)Joseph E. Stiglitz, a Nobel laureate in economics, has pointed how lack of opportunity leads to widening of inequality. It leads to concentration of income and wealth at the top, the hollowing out of the middle, and increasing poverty at the bottom.
Question 47. Current account in the Balance of Payment comprise is ___?
  1.    difference of total exports and imports in one year
  2.    trade balance plus invisible balance
  3.    invisible account like tourism, shipping, insurance, etc.
  4.    transactions like net external assistance, NRI deposits, etc.
 Discuss Question
Answer: Option B. -> trade balance plus invisible balance
Answer: (b)
Question 48. Which of the following statements is incorrect about Repo and Reverse Repo?

  1. At present, the repo rate is 11.75%

  2. At present, the reverse repo rate is 5.75%

  3. Repo rate is the rate at which RBI lends to commercial banks

  4. Reverse Repo is the rate at which RBI borrows from commercial banks


  1.    1 only
  2.    1, 3 and 4
  3.    1 and 2
  4.    None of the above
 Discuss Question
Answer: Option A. -> 1 only
Answer: (a)
At present, the repo rate is 4.00%
Question 49. When RBI announces an increase in Cash Reserve Ratio (CRR) it means:
  1.    The Union Government will have less money to lend.
  2.    The RBI will have less money to lend.
  3.    The commercial banks will have less money to lend.
  4.    The commercial banks will have more money to lend.
 Discuss Question
Answer: Option C. -> The commercial banks will have less money to lend.
Answer: (c)Cash reserve ratio (CRR) is the amount of funds that the banks have to keep with the RBI. If the central bank decides to increase the CRR, the available amount with the banks comes down.
Question 50. Mixed Economy means :
  1.    Co-existence of small and large industries
  2.    Co-existence of public and private sectors
  3.    Promoting both agriculture and industries in the economy
  4.    Co-existence of rich and poor
 Discuss Question
Answer: Option B. -> Co-existence of public and private sectors
Answer: (b)
A mixed economy is variously defined as an economic system consisting of a mixture of either markets and economic planning, public ownership and private ownership, or free markets and economic interventionism.
All modern economies are mixed where the means of production are shared between the private and public sectors.

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