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Download in pdf multiple choice questions(mcqs) & answers on fiscal system. These general awareness quiz objective questions answers include mcqs on Excise duty, Wholesale Price Index (WPI) etc.
(41)
Which of the following is a true statement about India Since 1951 ?
[A]
National and per capita incomes have both increased fast
[B]
National income has increased but per capita income has decreased
[C]
National income and per capita income have increased every year
[D]
National income has increased and per capita income has also increased but at a slower rate
Comment
Answer: Option [D]
The correct answer is National income has increased and per capita income has also increased but at a slower rate.
(42)
Which one of the following is the updated base for Wholesale Price Index (WPI) ?
[A]
2002 - 2003
[B]
2004 - 2005
[C]
2005 - 2006
[D]
2006 - 2007
Comment
Answer: Option [B]
The correct answer is 2004 - 2005. WPI tracks inflation at the producer level and CPI captures changes in prices levels at the consumer level. WPI does not capture changes in the prices of services, which CPI does. In WPI, more weightage is given to manufactured goods, while in CPI, more weightage is given to food items.
(43)
Which one of the following is not a feature of “Value Added Tax” ?
[A]
It is a multi-point destination-based system of taxation
[B]
It is a tax levied on value addition at each stage of transaction in the production-distribution chain
[C]
It is a tax on the final consumption of goods or services and must ultimately be borne by the consumer
[D]
It is basically a subject of the Central Government and the State Governments are only a facilitator for its successful implementation
Comment
Answer: Option [D]
The correct answer is It is basically a subject of the Central Government and the State Governments are only a facilitator for its successful implementation.
(44)
A rapid increase in the rate of inflation is sometimes attributed to the “base effect”. What is “base effect” ?
[A]
It is the impact of drastic deficiency in supply due to failure of crops
[B]
It is the impact of the surge in demand due to rapid economic growth
[C]
It is the impact of the price levels of previous year on the calculation of inflation rate
[D]
None of the above
Comment
Answer: Option [C]
The correct answer is It is the impact of the price levels of previous year on the calculation of inflation rate. The base effect relates to inflation in the corresponding period of the previous year, if the inflation rate was too low in the corresponding period of the previous year, even a smaller rise in the Price Index will arithmetically give a high rate of inflation now
(45)
Which one of the following statements appropriately describes the “fiscal stimulus” ?
[A]
It is a massive investment by the Government in manufacturing sector to ensure the supply of goods to meet the demand surge caused by rapid economic growth
[B]
It is an intense affirmative action of the Government to boost economic activity in the country
[C]
It is Government’s intensive action on financial institutions to ensure disbursement of loans to agriculture and allied sectors to promote greater food production and contain food inflation
[D]
It is an extreme affirmative action by the Government to pursue its policy of financial inclusion
Comment
Answer: Option [B]
The correct answer is It is an intense affirmative action of the Government to boost economic activity in the country. Fiscal stimulus consists of attempts by governments or government agencies to financially stimulate an economy. An economic stimulus is the use of monetary or fiscal policy changes to kick start growth during a recession.
(46)
Economic growth is usually coupled with
[A]
inflation
[B]
stagflation
[C]
deflation
[D]
All of these
Comment
Answer: Option [A]
Economic growth is usually coupled with inflation. Economic growth results in higher disposable income available with the consumers which increases the overall demand along with the supply available for the consumers. This increase in demand spurs inflation, which eventually becomes a necessary evil for a growing economy.
(47)
Under increasing returns the supply curve is
[A]
positively sloped from left to right
[B]
negatively sloped from left to right
[C]
parallel to the quantity-axis
[D]
parallel to the price-axis
Comment
Answer: Option [A]
Under increasing returns the supply curve is positively sloped from left to right. In most cases, the supply curve is drawn as a slope rising upward from left to right, since product price and quantity supplied are directly related.
(48)
In India, the tax proceeds of which one of the following as a percentage of gross tax revenue has significantly declined in the last five years
[A]
Service tax
[B]
Personal income tax
[C]
Excise duty
[D]
Corporation tax
Comment
Answer: Option [C]
The correct answer is Excise duty. The excise duty's share in the total tax revenue which was 41.3% in 1991-92, declined to 25.1% in 2006-07 It is the most that has declined in the last 5 years. Corporation tax has maximum share followed by income tax. Service tax was introduced very late so it’s share would obviously increase.
(49)
Which of the following are the main causes of slow rate of growth of per capita income in India ?
I. High capital-output ratio
II. High rate of growth of population
III. High rate of capital formation
IV. High level of fiscal deficits
[A]
Only I
[B]
I and II only
[C]
I and III only
[D]
All of these
Comment
(50)
In terms of economics visiting various places of India by foreign tourists is :
[A]
Export
[B]
Import
[C]
Production
[D]
Consumption
Comment
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