Indian Economy Test 79

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Indian Economy Test 79

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Weekly Quiz Competition

Question 1
1 / -0

Priority Sector lending by banks in India constitutes the lending to ________________.

A
agriculture

B
micro and small enterprises

C
weaker sections

D
all of the above

Solution

PSL includes all of the choices given in the question besides many other, for example, retail trade, minorities, etc.
Question 2
1 / -0

Select the correct one/ones the 'external debt' from the list given below :
1. Long term debt is defined as debt with an original maturity of more than one year.
2. Short term debt is defined as debt repayments on demand or with an original maturity of one year or less.

A
Only 1

B
Only 2

C
1 and 2

D
Neither 1 nor 2

Solution

This is one way how the World Bank / International Monetary Fund have defined these debts.
Question 3
1 / -0

Select the incorrect one about 'recession' as it is perceived in India.

A
A period of general economic decline, defined usually as a contraction in the GDP for two consecutive quarters or longer.

B
It is marked by high unemployment, stagnant wages, and fall in retail sales, does not last longer than one year.

C
Although recessions are considered a normal part of a capitalist economy, there is no unanimity among economists on its causes.

D
Recessions are better than stagnation but worse than slowdown and slackness.

Solution

Recession is always worse than stagnation as well as slowdown and slackness (slowdown and slackness are the same things).
Question 4
1 / -0

Select the correct one/ones about the system of tax collection in the case of the 'GST' in India, using the code given below:
1. It is a multi-point tax system with the end-user finally bearing the burden of the tax.
2. It has no cascading impact on the prices of the goods and services.
3. It is pro-poor without being anti-rich.

A
1 and 2

B
2 and 3

C
1 and 3

D
1, 2 and 3

Solution

GST is paid on the value of only value addition and not on the gross prices of the goods-this is why there is no case of 'tax upon tax' in this system-and thus, no cascading effect on the prices. It cuts the final price of the goods and service and that is why it is called 'pro-poor. But it is never 'anti-rich'.
Question 5
1 / -0

VAT method of tax collection has got dome in-built arrangement by which
1. it encourages growth and checks inflation.
2. it encourages tax compliance, discourages tax evasion.
Select the answer using the code given below:

A
Only 1

B
Only 2

C
1 and 2

D
Neither 1 nor 2

Solution

It encourages growth by making things cheaper (which induces higher consumption and finally higher production). It checks inflation as it is non-cascading in nature (there is no instance of tax upon tax.) Manufacturers and the individuals/ bodies related to the distribution chain pay it on the value addition they do (this is done by showing the 'receipts' of their purchasings by which the tax authorities get opportunity to 'cross-check' the real levels of the production)-this is how it induces better tax compliance and lower tax evasions.
Question 6
1 / -0

Consider the following statements regarding 'revenue deficit' and select the incorrect one/ones using the code given below:
1. It is the gap between the consumption expenditure of the Government and its current revenues.
2. It also indicates the extent to which the government has borrowed to finance the current expenditure.

A
Only 1

B
Only 2

C
1 and 2

D
Neither 1 nor 2
Question 7
1 / -0

Which of the following may be considered correct about 'zero-based budgeting'?

A
Fresh evaluation of every item if expenditure from the very beginning of each financial year.

B
When total expenditure of the government is kept equal to its total receipts.

C
When the fiscal deficit is kept at zero per cent of he gross domestic product.

D
When the government goes for zero level primary and monetized deficits.

Solution

Some of the special features of such a budgeting are-every department needs to provide the reason for its existence; a list of expenditures is made and funds are allotted accordingly with many areas remaining about any fund allocated to them. Some of the basic questions which are asked before doing any expenditures are - do we need to spend? Where do we need to spend? And how much do we need to spend?
Question 8
1 / -0

Select the correct reason/reasons why the governments impose taxes, using the code given below:
1. To redistribute the income in the economy
2. To subsidize various private goods

A
Only 1

B
Only 2

C
1 and 2

D
Neither 1 nor 2

Solution

Private goods are the items (goods and services) which are purchased by individual customers to fulfill their needs. Governments forward subsidies on such items (as on fertilizers, sugar, food grains, etc in India). This may be among the many reasons (such as education cess in India).
Question 9
1 / -0

Which of the following set of the 'canons of taxation' has been made the part of Indian tax reforms process till date? Select your answer using the code given below:
1. Equality
2. Certainty
3. Convenience
4. Economy

A
1 and 2

B
2,3 and 4

C
1 and 3

D
1,2,3 and 4

Solution

It was Adam Smith, father of economics, who laid down four cannons of taxation, which are equality, certainty, convenience and economy. A tax can be tasted on these four criteria. The ongoing tax reforms in India is an endeavour in this direction.
The Goods and Services Tax (GST) is one such effort. It would subsume under it many indirect taxes levied by the Central and State governments. It aims at unification of taxation system and removal of any cascading of taxes (tax on tax).
At every stage, from production to retail, the purchaser of any goods and services will only pay the GST charged by the immediate seller. This will reduce the burden of tax and benefit the consumer. As such the tax seems to achieve the cannons of certainty and convenience.
Question 10
1 / -0

Which of the following come under the Indian classification of the Small Saving Schemes (SSSs)? Select your answer using the code given below:
1. Postal Deposits comprising savings account, recurring deposits, time deposits of varying maturities and monthly income scheme (MIS)
2. Savings Certificates comprising the National Small Savings Certificate (NSC) and Kisan Vikas Patra (KVP)
3. Social Security Schemes comprising the public provident fund (PPF) and Senior Citizens' Savings Scheme (SCSS)

A
1 and 2

B
2 and 3

C
1 and 3

D
1,2 and 3

Solution

Small Saving Schemes have been always an important source of household savings in India. Small savings instruments can be classified under three heads, which are follows : (i) postal deposits [comprising savings account, recurring deposits, time deposits of varying maturities and monthly income scheme (MIS)]; (ii) savings certificates [National Small Savings Certificate VII (NSC) and Kisan Vikas Patra (KVP)] and (iii) social security schemes [public provident fund (PPF) and Senior Citizens' Savings Scheme (SCSS)]. A 'National Small Savings Fund' (NSSF) in the Public Account of India was established with effect from April 1, 1999.
All small savings collections are credited to this Fund. Similarly, all withdrawals under small savings schemes by the depositors are made out of the accumulations in this Fund. The balance in the Fund is invested in Central and State Government Securities.

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Re-Attempt Weekly Quiz Competition

Indian Economy Test 79

Result

Indian Economy Test 79

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SHARING IS CARING

Question 1

agriculture

micro and small enterprises

weaker sections

all of the above

Solution

Question 2

Only 1

Only 2

1 and 2

Neither 1 nor 2

Solution

Question 3

A period of general economic decline, defined usually as a contraction in the GDP for two consecutive quarters or longer.

It is marked by high unemployment, stagnant wages, and fall in retail sales, does not last longer than one year.

Although recessions are considered a normal part of a capitalist economy, there is no unanimity among economists on its causes.

Recessions are better than stagnation but worse than slowdown and slackness.

Solution

Question 4

1 and 2

2 and 3

1 and 3

1, 2 and 3

Solution

Question 5

Only 1

Only 2

1 and 2

Neither 1 nor 2

Solution

Question 6

Only 1

Only 2

1 and 2

Neither 1 nor 2

Question 7

Fresh evaluation of every item if expenditure from the very beginning of each financial year.

When total expenditure of the government is kept equal to its total receipts.

When the fiscal deficit is kept at zero per cent of he gross domestic product.

When the government goes for zero level primary and monetized deficits.

Solution

Question 8

Only 1

Only 2

1 and 2

Neither 1 nor 2

Solution

Question 9

1 and 2

2,3 and 4

1 and 3

1,2,3 and 4

Solution

Question 10

1 and 2

2 and 3

1 and 3

1,2 and 3

Solution

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