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Federal Finance System in India - General Knowledge Multiple Choice Questions and Answers | Page-5

41 Which of the following is the classification of Industries on the basis of raw-materials?
A Basics and Consumer
B Primary and Secondary
C Small Scale – Large scale
D Agro-based and Mineral based

Answer: Option [D]

The correct answer is Agro-based and Mineral based. Agro Based Industries use plant and animal based products as their raw materials. Example: Food Processing, Vegetable Oil, Cotton Textile, Dairy Products, etc. Mineral Based Industries use mineral ores as their raw materials.Iron made from iron ore is the product of mineral based industry. Cement,Machine Tools, etc. are the other examples of mineral based industries.

42 Which is the most essential function of an entrepreneur?
A Risk bearing
B Marketing
C Management
D Supervision

Answer: Option [A]

The correct answer is Risk bearing. An entrepreneur uses his ideas and knowledge to run an organization thus,he bears the risk involved in setting up an organization.



43 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

Answer: Option [A]

Excise duty on a commodity is payable with reference to its Production. An excise or excise tax (sometimes called a duty of excise special tax) is an inland tax on the sale, or production for sale, of specific goods or a tax on a good produced for sale, or sold, within a country or licenses for specific activities. Excises are distinguished from customs duties, which are taxes on importation. Excises are inland taxes, whereas customs duties are border taxes.

44 Purchasing Power Parity theory is related with
A Wage rate
B Bank rate
C Exchange rate
D Interest rate

Answer: Option [C]

Purchasing Power Parity theory is related with Exchange rate. Purchasing power parity (PPP) is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.

45 Which of the following taxes is not collected by the Central Government?
A Excise duty
B Professional tax
C Income tax
D Customs duty

Answer: Option [B]

The correct answer is Professional tax. Professional tax is a tax that is levied by a state government on all individuals who earn a living through any medium. This should not be confused with the definition of professionals that indicates people such as doctors. This is a tax that is to be paid by every single earning individual.

46 Which one of the following is a developmental expenditure?
A Grant-in-aid
B Debt services
C Civil administration
D Irrigation expenditure

Answer: Option [D]

The correct answer is Irrigation expenditure.

47 “Interest is a reward for parting with liquidity” is according to
A Marshall
B Keynes
C Ohlin
D Haberler

Answer: Option [B]

The correct answer is Keynes. According to Keynes, Interest was a payment against the loan which we lend to other people due to which our liquidity is reduces as the loan is given for a specific time period under a fixed rate of percentage. Therefore, interest was described as a reward for parting with liquidity.

48 Surplus earned by a factor other than land in the short period of referred to as
A Quasi-rent
B Net rent
C Economic rent
D Super-normal rent

Answer: Option [A]

Surplus earned by a factor other than land in the short period of referred to as Quasi-rent. Quasi-rent is the surplus which is received in the short period because of demand exceeding the supply by the man made factors besides land. It is an analytical term in economics, for the income earned, in excess of post-investment opportunity cost, by a sunk cost investment.

49 Which from the following is not true when the interest rate in the economy goes up?
A Lending decreases
B Saving increases
C Return on capital increases
D Cost of production increases

Answer: Option [C]

The correct answer is Return on capital increases. The most obvious place to start is by reducing costs or increasing sales. Monitoring areas that may be racking up excessive or inefficient costs is an important part of operational efficiency. Paying off debt, thereby reducing liabilities, can also improve the ROCE ratio.

50 At present, India is following
A Fixed exchange rate
B Floating exchange rate
C Pegged up exchange rate
D Pegged down exchange rate

Answer: Option [B]

At present, India is following Floating exchange rate. A floating exchange rate is an exchange rate system where a country's currency price is determined by the foreign exchange market, depending on the relative supply and demand of other currencies.

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