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Indian Fiscal System General Awareness Multiple Choice Questions and Answers | Page-2

Questions
11 Fiscal Responsibility and Budget Management Act (FRBMA) ACT 2003 concerns :
A fiscal deficit only
B revenue deficit only
C both fiscal and revenue deficit
D neither fiscal nor revenue deficit

Answer: Option [C]

The correct answer is both fiscal and revenue deficit. The FRBM Act, 2003 sets a target for the government to establish financial discipline in the economy,reduce fiscal deficit and improve the management of public funds. The Act sets target for the government to bring down fiscal deficit.

12 The temporary tax levied to obtain additional revenue is called :
A cess
B rate
C fee
D surcharge

Answer: Option [D]

The temporary tax levied to obtain additional revenue is called surcharge. A surcharge is an extra fee, charge, or tax that is added on to the cost of a good or service, beyond the initially quoted price. Often, a surcharge is added to an existing tax and is not included in the stated price of the good or service. The charge could reflect a locality's need to collect money for extra services, a hike to defray the cost of increased commodity pricing, such as with a fuel surcharge, or an extra fee on your wireless bill for access to emergency services.

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13 What are the two main attributes of a formal organization ?
A esteern and prestige
B role and duties
C dominance and supremacy
D rules and regulations

Answer: Option [D]

The correct answer is rules and regulations.

14 Which is correct with respect to the following ?

If the price of an inferior good falls, its demand :

A rises
B falls
C remains constant
D can be any of the above

Answer: Option [B]

If the price of an inferior good falls, its demand falls. Inferior goods are the goods whose demand falls when consumer's real income rises and whose demand rises when consumer's real income falls. Hence, when the price of the inferior goods falls, the quantity demanded for them decreases.

15 The existence of a Parallel Economy or Black Money :
A makes the economy more competitive
B makes the monetary policies less effective
C ensures a better distribution of income and wealth
D ensures increasing productive investment

Answer: Option [B]

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.

16 The cause of low per capita income in India is :
A of population growth
B of price rise
C more people are in rural areas
D of regional imbalances

Answer: Option [A]

The cause of low per capita income in India is of population growth. Rapid growth in population directly affects per capita income in an economy. The rapid growth leads to the problem of allocation of scarce resources. The lack of education, healthcare, and employment opportunities lowers the income level of the citizens, which results in low per capita income of the country.

17 Which among the following formulates fiscal policy ?
A RBI
B Finance Ministry
C President
D Planning Commission

Answer: Option [B]

The correct answer is Finance Ministry. In India, fiscal policy is formulated by the Ministry of Finance through its budget proposals. RBI formulates monetary policy. Finance Commission gives recommendation about allocation of financial resources between centre and states. And Planning Commission formulates Five Year Plans.

18 Dear Money Policy relates to :
A high price level
B large money supply
C high production
D high interest rate

Answer: Option [D]

Dear Money Policy relates to high interest rate. Dear money policy refers to a monetary policy by the central bank where the central bank sets high interest rates so that credit is not easily available to the general public in order to decrease the rate of inflation in the economy by curbing demand.

19 One of the problem in calculating the national income in India correctly is :
A under-er-employment
B inflation
C non-monetised consumption
D low saving

Answer: Option [C]

One of the problem in calculating the national income in India correctly is non-monetised consumption. This non-monetised consumption and the corresponding productive activities go unrecorded in labour statistics and in the national accounts.

20 Companies pay Corporation Tax on their :
A investment
B production
C sales proceeds
D incomes

Answer: Option [D]

Companies pay Corporation Tax on their incomes. A domestic corporate entity with a turnover upto Rs. 250 Crore, pays a flat rate of 25% corporate tax. For a particular financial year, if the total revenue earned by a company exceeds Rs. 1 crore, then a surcharge corporate tax of 5% is levied on such a corporation.

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