Fundamentals of Business Activities Test 17

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Fundamentals of Business Activities Test 17

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Weekly Quiz Competition

Question 1
1 / -0

Which one of the following taxes belong exclusively to the State Governments?

A
Income Tax

B
Agricultural Tax

C
Excise Tax

D
Wealth Tax

Solution

Agricultural tax belong exclusively to the State Governments. This means that tax from agricultural sector or primary sector of the economy is collected only by the state government. Central government has no authority of collecting agricultural tax.
Question 2
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In the pre-reforms period (i.e. before 1991), Export Subsidy Schemes were characterised by:

A
High transaction costs

B
Delays

C
Corruption

D
All of the above

Solution

India adopted socialist form of economy which involved a lot of government intervention into international trade where government used to offer export subsidies backed with transaction costs, delays and corruption so that only a few government selected companies could complete in the international market.
Question 3
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Which of the following is an objective of VAT?

A
To avoid double taxation effect or cascading effect

B
To promote cost-efficiency, by permitting credit on inputs

C
To ensure equitable distribution of tax impact amongst Dealers

D
All of the above

Solution

VAT stands for Value Added Tax. Enactment of VAT on goods has certain objectives:
a) To avoid double taxation effect or cascading effect
b) To promote cost-efficiency, by permitting credit on inputs
c) To ensure equitable distribution of tax impact amongst Dealers
Question 4
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Which of the following is not true about the pre-reforms period (i.e. before 1991)?

A
Shortage of Foreign Exchange

B
Heavy Government Borrowings

C
Huge Losses of Public Sector Enterprises

D
Surplus Budget in each financial year

Solution

In pre-reform period, that is, before the year of 1991, Surplus Budget in each financial year. Surplus Budget in each financial year introduced after the year of 1991. Budget can be defined as a statement of receipts and expenditure of an economy.
Question 5
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In the pre-reforms period (i.e. before 1991), Import of food grains was permitted ______________.

A
In order to meet domestic demand in case of shortage of foodgrains

B
To help Indians consume nutritious food

C
Whenever there was a favourable Balance of Trade

D
All of the above

Solution

In the pre-reforms period (i.e. before 1991), Import of food grains was permitted in order to meet domestic demand in case of shortage of foodgrains. Demand for food grains by the nation used to fall short in the pre-reform period, hence to cope up with the shortage of food grains, import was done from the foreign countries.
Question 6
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Which of the following does not relate to the External Sector Reforms in 1991?

A
Devaluation of the Rupee

B
Removal of restrictions on Foreign Exchange transactions

C
Export Support

D
Restrictions on Foreign Direct Investment

Solution

Restrictions on Foreign Direct Investment does not relate to the External Sector Reforms in 1991. After 1991, foreign direct investment was proposed so that India could avail high investments from outside and grow. New economic reforms was enacted in 1991 which liberalized the FDI.
Question 7
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As part of Economic Reforms in 1991, Financial Sector Reforms relates to :

A
Banking Sector

B
Capital Market Sector

C
Insurance Sector

D
All of the above

Solution

Financial sector reforms relates to reforms in all such sectors where finance was a major and prominent factor which included all the three sector i.e. banking, capital market, and insurance.
Question 8
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Which of the following does not relate to the Banking Sector Reforms in 1991?

A
Introduction of Derivative Products

B
Restriction of credit for purchase of consumer durables

C
Liberalisation of principles governing Dividend Payments

D
Emphasis on transparency

Solution

Prior to 1991, credit purchases was not allowed in the consumer market but after the coming of new economic policies credit purchase on consumer durables were allowed as there was high competition in the market after the coming of foreign merchandise.
Question 9
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In which of the following situations, the Law of Variable Proportions will not apply?

A
Improvement in technology

B
When all factors are proportionately varied

C
Where the factors must be used in fixed proportions to yield the product

D
All of the above

Solution

In the following situations, the Law of Variable Proportions will not apply:
a) Improvement in technology
b) When all factors are proportionately varied c) Where the factors must be used in fixed proportions to yield the product
Law of variable proportions is also known as the law of law of diminishing returns. This law shows the production function with one input factor variable while keeping the other input factors constant.
Question 10
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Which of the following does not relate to the External Sector Reforms in 1991?

A
Reduction in the number of items covered by import licenses

B
Permission for free trade of all items except a negative list of imports and exports

C
Increasing of import/ export duty rates

D
Permission for foreign direct investment

Solution

Increasing of import/ export duty rates does not relate to the External Sector Reforms in 1991. As per New economic policy which was adopted in 1991, the import rates and export duty rates were to be decreased so that there would be fair flow of goods between the domestic country and other countries as a result of which there will be rationalization in the tariff structure,

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Fundamentals of Business Activities Test 17

Result

Fundamentals of Business Activities Test 17

Score

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Rank

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SHARING IS CARING

Question 1

Income Tax

Agricultural Tax

Excise Tax

Wealth Tax

Solution

Question 2

High transaction costs

Delays

Corruption

All of the above

Solution

Question 3

To avoid double taxation effect or cascading effect

To promote cost-efficiency, by permitting credit on inputs

To ensure equitable distribution of tax impact amongst Dealers

All of the above

Solution

Question 4

Shortage of Foreign Exchange

Heavy Government Borrowings

Huge Losses of Public Sector Enterprises

Surplus Budget in each financial year

Solution

Question 5

In order to meet domestic demand in case of shortage of foodgrains

To help Indians consume nutritious food

Whenever there was a favourable Balance of Trade

All of the above

Solution

Question 6

Devaluation of the Rupee

Removal of restrictions on Foreign Exchange transactions

Export Support

Restrictions on Foreign Direct Investment

Solution

Question 7

Banking Sector

Capital Market Sector

Insurance Sector

All of the above

Solution

Question 8

Introduction of Derivative Products

Restriction of credit for purchase of consumer durables

Liberalisation of principles governing Dividend Payments

Emphasis on transparency

Solution

Question 9

Improvement in technology

When all factors are proportionately varied

Where the factors must be used in fixed proportions to yield the product

All of the above

Solution

Question 10

Reduction in the number of items covered by import licenses

Permission for free trade of all items except a negative list of imports and exports

Increasing of import/ export duty rates

Permission for foreign direct investment

Solution

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