Home
Learn,Revise
Video Series
MCQ Hub
Articles
Book Solutions
PDFs
RRB ALP – Paper
Shop
Public Finance and Fiscal Policy 04
Question
1
of 16
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
Q1. Deficit financing means the government borrows money from the
A.
IMF
B.
Ministry of Finance
C.
RBI
D.
WTO
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
C
Deficit financing typically involves the government borrowing from the central bank (RBI).
Q2. Non-Tax revenue can be increased by improving the working of
A.
Commercial Irrigation
B.
State Road Transport
C.
Electricity Boards
D.
None of the Above
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
A
Profit/user charges from government irrigation projects are a significant source of non-tax revenue.
Q3. Companies pay corporation tax on their
A.
investments
B.
incomes
C.
production
D.
sales proceeds
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
B
Corporation tax is a direct tax levied on the net income (profit) of companies.
Q4. The annual yield from which of the following Union Government taxes is the highest? (Historical context)
A.
Custom duties
B.
Corporation and income tax
C.
Inheritance/Wealth tax
D.
Excise duties
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
D
For a major part of India's post-independence history Excise duties were the top revenue generator.
Q5. Excise duties are taxes on
A.
sale
B.
import
C.
export
D.
production of commodities
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
D
Excise is an internal tax levied on the manufacture of goods within the country.
Q6. Sales Tax is
A.
Direct Tax
B.
Indirect Tax
C.
Central govt tax
D.
State govt tax
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
B
Sales tax is an indirect tax (now subsumed under GST) where the burden is shifted to the consumer.
Q7. Who was the Chairman of the 13th Finance Commission of India?
A.
Indira Rajaraman
B.
C Rangarajan
C.
Vijay Kelkar
D.
None of the above
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
C
Dr. Vijay Kelkar headed the commission that made recommendations for the period 2010–2015.
Q8. Which one among the following formulates the fiscal policy in India?
A.
Planning Commission
B.
Finance Commission
C.
RBI
D.
Ministry of Finance
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
D
The Ministry of Finance is responsible for the government's spending and taxation policy.
Q9. Fiscal deficit in the Union Budget means
A.
current exp - revenue
B.
borrowings from RBI
C.
sum of budgetary deficit and net borrowings
D.
sum of monetized deficit
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
C
It is the total gap in the government's budget that must be covered by borrowing.
Q10. General Anti Avoidance Rules (GAAR) applicable from
A.
April 1 2015
B.
April 1 2016
C.
April 1 2017
D.
April 1 2018
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
C
GAAR was introduced to check tax evasion by entities that route investments through tax havens.
Q11. Which of the following taxes is not levied by the Union Government?
A.
Wealth tax
B.
Profession tax
C.
Excise duty
D.
Income tax
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
B
Profession tax is levied by State Governments under Article 276 of the Constitution.
Q12. Subsidies mean
A.
govt purchase payment
B.
factor payment
C.
shareholder payment
D.
payment made by govt to business without buying goods
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
D
Subsidies are financial aid provided by the government to keep prices of essential goods/services low.
Q13. VAT scheme is expected to
A.
Raise foreign prices
B.
Raise luxury prices
C.
Lower everyday prices
D.
Avoid cascading effect of taxes
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
D
VAT avoids tax-on-tax (cascading) by providing credit for taxes paid on inputs at each production stage.
Q14. An advalorem duty is a tax on the basis of
A.
price of a commodity
B.
unit of a commodity
C.
advertisement
D.
value added
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
A
Ad valorem tax is a charge levied as a percentage of the assessed value of a product or transaction.
Q15. Revenue of state governments are raised from sources except
A.
entertainment tax
B.
expenditure tax
C.
agricultural income tax
D.
land revenue
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
C
(Correction: Many tests use this to mean Union Taxes vs State; Agricultural Income Tax is actually a State subject).
Q16. Exise duty is imposed on
A.
Sale
B.
Production
C.
Consumption
D.
All of above
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
B
Excise duty is a manufacturing tax levied on goods produced within the country.
← PREV
FINISH TEST
NEXT →
