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Federal Finance System in India - General Knowledge Multiple Choice Questions and Answers | Page-6

Questions
51 The terms “Micro Economics” and “Macro Economics” were coined by
A J.M. Keynes
B Ranger Frisch
C Ranger Nurkse
D Alfred Marshall

Answer: Option [B]

The terms “Micro Economics” and “Macro Economics” were coined by Ranger Frisch. Ragnar Anton Kittil Frisch was a Norwegian economist . He coined the term micro economics and macro economics .Macro economics deals the economy as a whole. In micro economics , study of economics is done from an individual point of view.

52 The existence of a parallel economy or Black Money
A Makes the economy more competitive
B Ensures increasing productive investment
C Makes the monetary policies less effective
D Ensures a better distribution of income and wealth

Answer: Option [C]

The existence of a parallel economy or Black Money Makes the monetary policies less effective. The existence Black money lead to the creation of a parallel economy. It also makes the monetary policies less effective as the government cannot account properly account for the money which is not formally included in the system.

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53 Which from the following taxes are levied and collected by the centre but their net proceeds are wholly transferred to states?
A Taxes on Advertisement
B Stamps and Registration
C Expenditure Tax and Gift Tax
D Additional Duties of Excise in lieu of Sales Tax

Answer: Option [A]

The correct answer is Taxes on Advertisement. Apart from taxes levied and collected by the States, the Constitution has provided for the revenues for certain taxes on the Union List to be allotted, partly or wholly to the States. There are taxes which are levied and collected by the Union, but the entire proceeds of which are assigned to the states, in proportion determined by the Parliament.

54 Which from the following sets belongs to Central tax?
A Custom duty, Entertainment tax and Income tax
B Income tax, Custom duty and House tax
C Excise duty, Custom duty and Income tax
D Excise duty, Sales tax and Custom duty

Answer: Option [C]

The correct answer is Excise duty, Custom duty and Income tax.

  • The taxing powers of the central government encompass taxes on income (except agricultural income), excise on goods produced (other than alcohol), customs duties, and inter-state sale of goods.
  • The authority to levy a tax is coming from the Constitution which allocates the power to levy various taxes between the Centre and the State.
55 Disinvestment in Public Sector is called
A Privatisation
B Industrialisation
C Globalisation
D Liberalisation

Answer: Option [A]

Disinvestment in Public Sector is called Privatisation. Disinvestment is the process in which a certain percentage of shares of public sector units are disinvested to the private sector. It is also known as privatization. Disinvestments can take the form of divestment or a reduction of capital expenditures (CapEx). Disinvestment is carried out for a variety of reasons, such as strategic, political, or environmental.

56 Rate of interest is determined by
A Central Government
B Commercial Banks
C Liquidity preference
D The rate of return on the capital invested

Answer: Option [B]

Rate of interest is determined by Commercial Banks. Interest rates are determined, in large part, by central banks who actively commit to maintaining a target interest rate. They do so by intervening directly in the open market through open market operations (OMO), buying or selling Treasury securities to influence short-term rates.

57 The Government set up a committee headed by the Chairman, Central Board of Direct Taxes some time back to go into-
A Codification of tax laws
B The concerns of the foreign investors in India with regard to taxation matters
C The entire structure of tax laws including the question of imposition of bank tax
D Aspects of generation of black money, its transfer abroad and bringing back such money into India’s legitimate financial system

Answer: Option [D]

The correct answer is aspects of generation of black money, its transfer abroad and bringing back such money into India’s legitimate financial system.

58 Which from the following is a part of tertiary sector?
A Power and transportation
B Cultivation of crops
C Animal Husbandry
D Super-normal rent

Answer: Option [A]

The correct answer is Power and transportation. The tertiary sector covers a wide range of activities from commerce to administration, transport, financial and real estate activities, business and personal services, education, health and social work.

59 A mixed economy refers to an economic system where
A Only the private sector operates under government control
B The economy functions with foreign collaboration
C Both the government and the private sectors operate sectors operate simultaneously
D No foreign investment is allowed

Answer: Option [C]

A mixed economy refers to an economic system where both the government and the private sectors operate sectors operate simultaneously. A mixed economic system is a system that combines aspects of both capitalism and socialism. A mixed economic system protects private property and allows a level of economic freedom in the use of capital, but also allows for governments to interfere in economic activities in order to achieve social aims.

60 A Black Market is a situation wherein
A Goods are sold secretly
B Goods are loaded by the producers
C Goods are made available (sold) only after there is a rise in prices
D Goods are sold at prices higher than what is fixed by the Government

Answer: Option [A]

A Black Market is a situation where in Goods are sold secretly. A black market is any market where the exchange of goods and services takes place in order to facilitate the transaction of illegal goods or to avoid government oversight and taxes, or both.

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