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Federal Finance System in India - General Knowledge Multiple Choice Questions and Answers | Page-2

Questions
11 Which among the following statements is not true when there is an increase in interest rate in an economy?
A Increase in saving
B Decrease in loan
C Increase in production cost
D Increase in capital return

Answer: Option [D]

The correct answer is Increase in capital return. A rising ROE suggests that a company is increasing its profit generation without needing as much capital. It also indicates how well a company's management deploys shareholder capital. A higher ROE is usually better while a falling ROE may indicate a less efficient usage of equity capital.

12 How the interest-level of a country is affected by FDI?
A Increases
B Decreases
C Remains unaffected
D There is increase or decrease

Answer: Option [B]

The correct answer is Decreases. The real Interest rate has an inverse relationship with FDI and GDP. Which means when there are high FDI inflow Real interest rate decreases. Which means that high FDI leads to higher inflation. fdi is 30% account for domestic inflation.

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13 Which among the following is not a non-customs duty obstacle in the world trade?
A Quantity restriction
B Restrictions on goods quality
C Determination of import duty uniformly
D Establishment of Standard of labour in manufacturing

Answer: Option [C]

The correct answer is Determination of import duty uniformly. Non-tariff barriers to trade include import quotas, special licenses, unreasonable standards for the quality of goods, bureaucratic delays at customs, export restrictions, limiting the activities of state trading, export subsidies, countervailing duties, technical barriers to trade, sanitary and phyto- sanitary measures, rules of origin, etc. Determination of import duty uniformly is comes under the sovereign duty of a nation. It is internal development.

14 Which among the following has the least possibility of globalization?
A Increase in infrastructure
B To manage resources for investment
C Selections of labour force
D Location of capital works

Answer: Option [D]

The correct answer is Location of capital works.

15 Indirect tax means:
A Tax base is income
B Direct relationship between tax payer and the government
C There is not direct relationship between the tax payer and the government
D The incidence and impact are on the same person on whom tax is imposed

Answer: Option [C]

Indirect tax means there is not direct relationship between the tax payer and the government. An indirect tax, or goods and services tax (GST), excise, consumption tax, tariff is a tax that is levied upon goods and services before they reach the customer who ultimately pays the indirect tax as a part of market price of the good or service purchased.

16 Which one of the following is NOT an example of indirect tax?
A Expenditure tax
B Customs duty
C Excise duty
D Sales tax

Answer: Option [A]

The correct answer is Expenditure tax.

17 The major aim of devaluation is to:
A Encourage imports
B Encourage exports
C Encourage both exports and imports
D Discourage both exports and imports

Answer: Option [B]

The correct answer is Encourage exports. The major aim of devaluation is to encourage exports. Devaluation is a deliberate downward adjustment to the value of country's currency, relative to another currency, group of currencies. One reason a country may devaluate its currency is to combat trade imbalances. Devaluation causes a country's exports to become less expensive, making them more competitive on the global market. This in turn means that imports are more expensive, making domestic consumers less likely to purchase them.

18 Interest on public debt is a part of:
A National income
B Interest payments by households
C Transfer payments by the Govt.
D Transfer payments by the enterprises

Answer: Option [C]

Interest on public debt is a part of transfer payments by the Govt. The interest on the national debt is how much the federal government must pay on outstanding public debt each year. The national debt includes debt owed to individuals, to businesses, and to foreign central banks, as well as intragovernmental holdings.

19 What is USP in marketing field?
A US Programme based
B Uninterrupted power supply
C Exclusive marketing features
D Unique Selling Proposition

Answer: Option [D]

The correct answer is Unique Selling Proposition. A unique selling proposition, more commonly referred to as a USP, is the one thing that makes your business better than the competition. It's a specific benefit that makes your business stand out when compared to other businesses in your market.

20 A tax is characterized by horizontal equity if its liability is
A Proportional to the income of tax payers
B The same for every tax payer
C Similar for tax payers in similar circumstances
D Proportional to the expenditure of tax payers

Answer: Option [A]

A tax is characterized by horizontal equity if its liability is Proportional to the income of tax payers. Horizontal equity suggests it is fair for people of equal ability to pay the same amount in taxes. Vertical equity is the idea that people who has a higher ability to pay more than those who have a lower ability to pay, as long as the increase in tax level is considered to be reasonable.

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