Federal Finance System in India - Chapter-wise Economics Multiple Choice Questions (MCQs) with Answers

31 A closed economy is one which

A is not a member of the U. N. O.

B does not have a coastal line

C does not trade with other countries

D does not possess any means of international transport

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Answer: Option [C]

32 Operating Surplus arises in the

A Government Sector

B Enterprise Sector

C Subsistence farming

D Production for self-consumption

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Answer: Option [A]

33 Which of the following taxes is such which does not cause rise in price?

A Sales tax

B Income tax

C Import duty

D None of the above

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Answer: Option [B]

34 Who among the following has suggested tax on expenditure?

A Musgrave

B Dalton

C Kaldor

D Gautam Mathur

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Answer: Option [C]

35 Excise duty on a commodity is payable with reference to its

A Production

B Production and sale

C Production and transportation

D Production, transportation and sale

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Answer: Option [A]

36 What is Value Added Tax (VAT)?

A A new tax to be imposed on the producers of capital goods

B A simple, transparent, easy to pay tax imposed on consumers

C A single tax that replaces State taxes like, surcharge, turnover tax, etc.

D A new initiative taken by the Government to increase the tax-burden of high income groups

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Answer: Option [C]

37 A mixed economy works primarily through the

A Market mechanism

B Central allocative machinery

C Market mechanism regulated by Government policy

D Market mechanism guided by Government participation and planning

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Answer: Option [D]

38 ‘Golden Handshake Scheme’ is associated with

A Voluntary retirement

B Inviting foreign companies

C Establishing joint enterprises

D Private investment in public enterprises

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Answer: Option [A]

39 According to modern thinking the law of diminishing returns applies to

A Mining

B Industry

C Agriculture

D All fields of production

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Answer: Option [D]

40 If the tax rate increase with the higher level of income , it shall be called

A Regressive tax

B Lump sum tax

C Progressive tax

D Proportional tax

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Answer: Option [C]

Federal Finance System in India - General Knowledge Multiple Choice Questions and Answers | Page-4

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