This quiz works best with JavaScript enabled. Home > General Knowledge > Indian Economy > Planning > Fiscal System Of India – Quiz 2 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Fiscal System Of India Quiz 2 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. How does the consumer benefit with VAT? [CPO SI 2003] A) It removes tax on tax and thus reduces price-rise. B) It reduces the cost of production. C) With the abolition of the sales tax. D) Due to the exemption of small Businesses from the tax within certain limits prescribed by the State. Show Answer Correct Answer: A) It removes tax on tax and thus reduces price-rise. 2. National income is the same as: A) Net National Product at factor cost. B) Net National Product at market price. C) Net Domestic Product at cost factor. D) Net Domestic Product at market price. Show Answer Correct Answer: A) Net National Product at factor cost. 3. A budgetary deficit means: A) Capital expenditure is more than capital revenue. B) Current expenditure is more than current revenue. C) Total expenditure is more than current revenue. D) Total expenditure is more than total revenue. Show Answer Correct Answer: D) Total expenditure is more than total revenue. 4. The prices at which the government purchases food grains for maintaining the public distribution system and for building up buffer stocks are known as : A) Minimum Support Prices. B) Ceiling Prices. C) Issue Prices. D) Procurement Prices. Show Answer Correct Answer: D) Procurement Prices. 5. Fiscal Policy is controlled by ..... A) The Government. B) The states. C) The Department of Commerce. D) The Federal Reserve System. Show Answer Correct Answer: A) The Government. 6. A Multinational is: [CDS 1991] A) A company operating in several countries. B) A company having shareholders from more than one country. C) A company which does charitable work in poor countries. D) A company that operates only in those countries that do not have import restrictions. Show Answer Correct Answer: A) A company operating in several countries. 7. Which of the following taxes is not levied by the Union Government? A) Income Tax. B) Wealth Tax. C) Excise Duty. D) Profession Tax. Show Answer Correct Answer: D) Profession Tax. 8. An example of a contractionary fiscal policy would be if: A) Taxes were increased. B) The Fed decrease the fed funds rate. C) The government bailed out GM. D) Taxes were cut. Show Answer Correct Answer: A) Taxes were increased. 9. Which of the following is not a limitation of Fiscal policy? A) Instability. B) Defective tax system. C) Proper income distribution. D) Inflation. Show Answer Correct Answer: C) Proper income distribution. 10. Under increasing returns the supply curve is [SSC (10+2) 2010] A) Positively sloped from left to right. B) Negatively sloped from left to right. C) Parallel to the quantity-axis. D) Parallel to the price-axis. Show Answer Correct Answer: A) Positively sloped from left to right. 11. Which of the following is an indirect tax? A) Corporation Tax. B) Wealth Tax. C) Excise Duty. D) Capital Gains Tax. Show Answer Correct Answer: C) Excise Duty. 12. Rate of growth of an economy is measured in terms of: A) Per capita income. B) Industrial development. C) Number of people who have been lifted above the poverty line. D) National income. Show Answer Correct Answer: D) National income. 13. The National Income is more at current prices than at constant prices because: [CDS 1992] A) Increase in production is more than increase in price. B) Of decrease in production only. C) Increase in price is equal to increase in production. D) Increase in price is more than production. Show Answer Correct Answer: A) Increase in production is more than increase in price. 14. Taxation and the government's expenditure policy are dealt under the : A) Fiscal policy. B) Budget. C) Monetary policy. D) Trade policy. Show Answer Correct Answer: A) Fiscal policy. 15. Temporary tax levied to obtain additional revenue is called: A) Fee. B) Rate. C) Surcharge. D) Cess. Show Answer Correct Answer: C) Surcharge. 16. An example of expansionary fiscal policy would be A) Cutting taxes. B) Cutting production of consumer goods. C) Cutting prices of consumer goods. D) Cutting government spending. Show Answer Correct Answer: A) Cutting taxes. 17. Grants or advances made by the House to enable the government to carry on until the voting of the demands for grants and passing of the General Appropriation Bill is called: A) Complementary budget. B) Contingency budget. C) Vote on account. D) Supplementary budget. Show Answer Correct Answer: C) Vote on account. 18. What is the impact on the "Social overhead capital requirements" of an economy, if the population increases? A) FALL. B) UNCHANGED. C) INCREASE. D) FALL DRASTICALLY. Show Answer Correct Answer: C) INCREASE. 19. The budget broadly comprises: (i) revenue budget, and (li) capital budget. Which of the following item or items is/are not covered under the revenue budget? I. Different proceeds of taxes and other duties levied by the government II. Interest and dividend on investments made by the government III. Expenditure on running government and various services IV. Market loans raised by the government A) III and IV. B) II and III. C) Only II. D) Only IV. Show Answer Correct Answer: D) Only IV. 20. The highest weight in the revised Whole Sale Price Index, implemented from September 2010 is given to which of the following item? [Corporation Bank PO 2011] A) Fuel. B) Food items. C) Manufactured items. D) Primary Articles. E) All of these. Show Answer Correct Answer: B) Food items. 21. Invisible trade is a trade: [IAS 1992] A) Of government with public institutions. B) Of the services like the bank, marine companies and shipping companies. C) Of corporate and financial institutions with government. D) Of government with other countries. Show Answer Correct Answer: B) Of the services like the bank, marine companies and shipping companies. 22. Once the demands for grants and expenditure of different departments are passed by the Parliament, a bill to draw money from Consolidated Fund India for these purposes is introduced. This bill is called: A) Appropriation bill. B) Money bill. C) Finance bill. D) Credit budget bill. Show Answer Correct Answer: A) Appropriation bill. 23. The principal source of revenue to the State Government in India is : A) Income Tax. B) Sales Tax. C) State Excise Duties. D) Land Revenue. Show Answer Correct Answer: B) Sales Tax. 24. Estimation of national income in India is difficult due to : I. illiteracy of people II. non-monetised consumption III. inflation IV. people holding multiple jobs A) I, II, III and IV. B) II and III. C) I and IV. D) I, II and IV. Show Answer Correct Answer: D) I, II and IV. 25. Octroi is levied and collected by: A) Centre. B) State Government. C) Local bodies. D) All the above. Show Answer Correct Answer: C) Local bodies. 26. During a economic expansion, the Federal Government should use ..... A) An expansionary fiscal policy. B) A contractionary fiscal policy. Show Answer Correct Answer: B) A contractionary fiscal policy. 27. Fiscal deficit in the budget means: [CDS 1999] A) Revenue deficit plus the net borrowings of the government. B) Primary deficit minus capital deficit. C) Budgetary deficit plus the net borrowings of the government. D) Capital deficit plus revenue deficit. Show Answer Correct Answer: C) Budgetary deficit plus the net borrowings of the government. 28. The Fiscal Responsibility and Budget Management (FRBM) Act aimed fora. eliminating both revenue deficit and fiscal deficitb. giving flexibility to RBI for inflation management A) 1 only. B) 2 only. C) Both 1 and 2. D) Neither 1 nor 2. Show Answer Correct Answer: B) 2 only. 29. The most appropriate measure of a country's economic growth is the: A) Net domestic product. B) Per capita real income. C) Gross domestic product. D) Net national product. Show Answer Correct Answer: B) Per capita real income. 30. In India, the service tax was first introduced in the year: [CDS 2001] A) 1996. B) 1998. C) 1992. D) 1994. Show Answer Correct Answer: D) 1994. 31. Which one of the following is the correct statements? Service tax is a/an [IAS 2006] A) Indirect tax levied by the Central Government. B) Direct tax levied by the Central Government. C) Indirect tax levied by the State Government. D) Direct tax levied by the State Government. Show Answer Correct Answer: A) Indirect tax levied by the Central Government. 32. Match List I with List II and select the correct answer using the codes given below the Lists1. Fiscal deficit-(A) Excess of total expenditure over total receipts2. Budget deficit-(B) Excess of revenue expenditure over revenue receipts3. Revenue deficit-(C) Excess of total expenditure over total receipts less borrowings4. Primary deficit ..... (D) Excess of total expenditure over total receipts less borrowings and interest payments A) 1-C, 2-A, 3-D, 4-B. B) 1-D, 2-C, 3-B, 4-A. C) 1-C, 2-A, 3-B, 4-D. D) 1-A, 2-C, 3-B, 4-D. Show Answer Correct Answer: B) 1-D, 2-C, 3-B, 4-A. 33. In terms of economy, the visit by foreign nationals to witness the XIX Common Wealth Games in India amounted to [CSAT 2011] A) Production. B) Export. C) Import. D) Consumption. Show Answer Correct Answer: B) Export. 34. One of the problems in calculating the national income in India correctly is : [Railways 1994] A) Under-er-employment. B) Non-monetised consumption. C) Low savings. D) Inflation. Show Answer Correct Answer: B) Non-monetised consumption. 35. In a country like India, why should an increase of direct taxes be preferred to an increase in indirect taxes? A) Direct taxes serve the end of Socialism by taking away the excessive wealth from the rich. B) Direct taxes involve the well-off sections of the society while indirect taxes affect the masses. C) It is easy to realise direct taxes and is thus useful in a country troubled by tax evasion. D) All of the above. Show Answer Correct Answer: D) All of the above. 36. Which one of the following is not a feature of "Value Added Tax"? [CSAT 2011] A) It is a multi-point destination-based system of taxation. B) It is a tax levied on value addition at each stage of transaction in the production- distribution chain. C) It is a tax on the final consumption of goods or services and must ultimately be borne by the consumer. D) It is basically a subject of the Central Government and the State Governments are only a facilitator for its Successful implementation. Show Answer Correct Answer: D) It is basically a subject of the Central Government and the State Governments are only a facilitator for its Successful implementation. 37. Which of the following is not a tool of fiscal policy? A) Taxing. B) Spending. C) Interest Rates. D) All of these options are tools of fiscal policy. Show Answer Correct Answer: C) Interest Rates. 38. National income refers to: [CPO SI 2002] A) Money value of goods 'and services produced in a country during a year. B) Money value of stocks and shares of a country during a year. C) Money value of capital goods produced by a country during a year. D) Money value of consumer goods produced by a country during a year. Show Answer Correct Answer: A) Money value of goods 'and services produced in a country during a year. 39. Who was the chairman of National Income Committee? A) D.R. Gadgil. B) A.M. Khusro. C) V.K.R.V. Rao. D) P. C. Mahalanobis. Show Answer Correct Answer: D) P. C. Mahalanobis. 40. Which one of the following situations makes a firm most efficient? [CDS 2002] A) Falling average costs. B) Rising average costs. C) Constant average costs. D) Lowest average costs. Show Answer Correct Answer: D) Lowest average costs. 41. The minimum effect of Direct Taxes is on : A) Capital goods. B) Income. C) Consumer goods. D) Food price. Show Answer Correct Answer: B) Income. 42. Which one of the following statements regarding the levying, collecting and distribution of Income Tax is correct? [IAS 1999] A) The Union levies, collects and distributes the proceeds of income tax between itself and the states. B) The Union levies, collects and keeps all the proceeds of income tax to itself. C) The Union levies and collects the tax but all the proceeds are distributed among the states. D) Only the surcharge levied on income tax is shared between the Union and the States. Show Answer Correct Answer: A) The Union levies, collects and distributes the proceeds of income tax between itself and the states. 43. National income ignores [CDS 2012] A) Sales of firm. B) Salary of employees. C) Exports of the IT sector. D) Sale of land. Show Answer Correct Answer: B) Salary of employees. 44. The South Asian Free Trade Agreement (SAFTA) was introduced with a view of levying how much customs duty for trading any product within the SAARC zone? [RBI Grade B Officer 2011] A) 5%. B) No customs duty. C) 4%. D) 1%. E) 2%. Show Answer Correct Answer: B) No customs duty. 45. Tax collection of Central govt. was lowest as compare to G.D.P., in which of the following year? A) 2001-2002. B) 2000-2001. C) 2002-2003. D) 1999-2000. Show Answer Correct Answer: D) 1999-2000. 46. Which of the following is not a method of estimating national income? [I. Tax & Central Excise 1991] A) Income method. B) Expenditure method. C) Export-import method. D) Value-added method. Show Answer Correct Answer: C) Export-import method. 47. Fresh evalution of every item of expenditure from the very beginning of each financial year is called: [SBI PO 1991] A) Performance Budgeting. B) Deficit Budgeting. C) Fresh Budgeting. D) Zero-based Budgeting. Show Answer Correct Answer: D) Zero-based Budgeting. 48. Consider the following statements regarding Fisal Policy:a. It helps to maintain the economy's growth rate so that certain economic goals can be achieved.b. It aims to achieve full employment, or near full employment, as a tool to recover from low economic activity.Which of the statements given above is/are correct? A) 1 only. B) ) 2 only. C) Both 1 and 2. D) Neither 1 nor 2. Show Answer Correct Answer: C) Both 1 and 2. 49. Which one of the following forms the largest share of deficit in Govt. of India budget? [UP PCS 2002] A) Primary deficit. B) Fiscal deficit. C) Revenue deficit. D) Budgetary deficit. Show Answer Correct Answer: B) Fiscal deficit. 50. Economic growth is usually coupled with [CSAT 2011] A) Deflation. B) Stagflation. C) Inflation. D) Hyperinflation. Show Answer Correct Answer: C) Inflation. 51. Metallic forms of money such as pennies, nickles, dimes, and quarters. A) Coins and currency. B) Currency. C) Coins. D) Debit cards. Show Answer Correct Answer: C) Coins. 52. According to the law of demand, when: A) Price increases demand decreases. B) Price decreases demand decreases. C) Price increases demand increases. D) Price decreases demand does not change. Show Answer Correct Answer: A) Price increases demand decreases. 53. To know whether the rich are getting richer and the poor getting poorer, it is necessary to compare; [IAS 1994] A) The availability of foodgrains among two sets of people, one rich and the other poor, over different periods of time. B) The distribution of income of an identical set of income recipients in different periods of time. C) The wholesale price index over different periods of time for different regions. D) The distribution of income of different sets of income recipients at a point of time. Show Answer Correct Answer: B) The distribution of income of an identical set of income recipients in different periods of time. 54. In India, deficit financing is used for raising resources for A) Adjusting the balance of payments. B) Redemption of public debt. C) Reducing the foreign debt. D) Economic development. Show Answer Correct Answer: D) Economic development. 55. With reference to revenue deficit, consider the following statements:1. It includes only those transactions that affect current income and expenditure of government.2. It considers the current borrowing by the government.As per the FRBM Act, the government is required to reduce the revenue deficit to 3% of the GDPWhich of the statements given above is/are correct? A) 1 only. B) 1 and 2 only. C) 2 and 3 only. D) 1, 2, and 3. Show Answer Correct Answer: A) 1 only. 56. Deficit financing leads to inflation in general, but it can be checked if: A) Government expenditure leads to increase in aggregate supply in ratio of aggregate demand. B) Aggregate demand is increased only. C) All the expenditure is denoted national debt payment only. D) All the above. Show Answer Correct Answer: A) Government expenditure leads to increase in aggregate supply in ratio of aggregate demand. 57. Which of the following is not shared by the Centre and the States? A) Union Excise Duties. B) Corporation Tax. C) Income Tax. D) Sales Tax. Show Answer Correct Answer: D) Sales Tax. 58. When the Reserve Bank of India announces an increase of the Cash Reserve 'Ratio, what does it mean? [IAS 2010] A) The Reserve Bank of India will have less money to lend. B) The Union Government will have less money to lend. C) The commercial banks will have more money to lend. D) The commercial banks will have less money to lend. Show Answer Correct Answer: D) The commercial banks will have less money to lend. 59. Fiscal deficit in the Union Budget means: [IAS 1994] A) The difference between current expenditure and current revenue. B) Net increase in Union Government's borrowings from the Reserve Bank of India. C) The sum of budgetary deficit and net increase in internal and external borrowings. D) The sum of monetised deficit and budgetary deficit. Show Answer Correct Answer: C) The sum of budgetary deficit and net increase in internal and external borrowings. 60. By which bill does the government make arrangement for the collection of revenues for a year? A) Economic Bill. B) Supplementary Budget. C) Fiscal Budget. D) Finance Bill. Show Answer Correct Answer: D) Finance Bill. ← PreviousNext →Related QuizzesIndian Economy QuizzesGeneral Knowledge QuizzesFiscal System Of India Quiz 1Fiscal System Of India Quiz 3Fiscal System Of India Quiz 4Indian Economic Development Policy QuizIndian Economy And Planning Quiz 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books