Chapter:

170+ Fiscal System of India Solved MCQs

in Indian Economy

These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Bachelor of Business Administration (BBA) , Bachelor of Arts (BA) , Bachelor of Arts in Economics (BA Economics) , Union Public Service Commission (UPSC) .

Chapters

Take a Test

1.	Which of the following is the basis for determining the national income?
A.	Total revenue of the State
B.	Net profit earned and expenditure incurred by the State
C.	Production of goods and services
D.	All of the above
Answer» C. Production of goods and services

2.	Which of the following is not a method of estimating national income? [I. Tax & Central Excise 1991]
A.	Income method
B.	Value-added method
C.	Expenditure method
D.	Export-import method
Answer» D. Export-import method

3.	The national income of India is estimated mainly through: [CBI 1993]
A.	production method alone
B.	expenditure method alone
C.	production and expenditure methods
D.	production and income methods
Answer» D. production and income methods

4.	Which of the following are referred to as the developed economies?
A.	Countries earning huge industrial profits
B.	Countries proficient in trade and export
C.	Countries having large per capita income
D.	Countries advanced in technology
Answer» C. Countries having large per capita income

5.	An advalorem duty is a tax on the basis of: [IAS 1988]
A.	the price of a commodity
B.	the value added
C.	the advertisement expenditure
D.	the unit of the commodity
Answer» A. the price of a commodity

6.	Consider the following statements with regard to Statutory liquidity Ratio (SLR) : 1. To meet SLR, commercial banks can use cash only. 2. SLR is maintained by the banks with themselves. 3. SLR restricts the banks' leverage in pumping more money into the economy. Which of the statements given above is/are correct? [CDS 2010]
A.	1, 2 and 3
B.	1 and 3
C.	2 and 3
D.	2 only
Answer» C. 2 and 3

7.	Which of the following is not true about 'vote-on-account'? [Bank PO 1991]
A.	It is a budget presented in the Parliament to cover the deficit left by the last budget
B.	It does not allow the Government to set for the economic policies of the new plan which starts from April 1
C.	It prevents the Government from imposing fresh taxes or withdrawing old one
D.	This allows the Government to withdraw an amount for a period with the consent of Parliament
Answer» A. It is a budget presented in the Parliament to cover the deficit left by the last budget

8.	Consider the following statements: 1. The repo rate is the rate at which other banks borrow from the Reserve Bank of India. 2. A value of 1 for Gini Coefficient in a country implies that there is perfectly equal income for everyone in its population. Which of the statements giver, above is/are correct? [IAS 2007]
A.	1 only
B.	2 only
C.	Both 1 and 2
D.	Neither 1 nor 2
Answer» A. 1 only

9.	The system of Budget was introduced in India during the viceroyalty of: [Central Excise 1994]
A.	Canning
B.	Dalhousie
C.	Ripon
D.	Elgin
Answer» A. Canning

10.	Which one of the following statements is correct? Fiscal Responsibility and Budget Management Act (FRBMA) concerns [IAS 2006]
A.	fiscal deficit only
B.	revenue deficit only
C.	both fiscal and revenue deficit
D.	neither fiscal deficit nor revenue deficit
Answer» C. both fiscal and revenue deficit

11.	Temporary tax levied to obtain additional revenue is called:
A.	cess
B.	rate
C.	fee
D.	surcharge
Answer» D. surcharge

13.	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
Answer» D. national income

15.	Which is the best measure of economic growth of a country ?
A.	GNP
B.	GDP
C.	Net revenue
D.	None of these
Answer» A. GNP

16.	Since 1951, in India:
A.	national income has increased but per capita income has decreased
B.	national and per capita incomes have both increased fast
C.	national income has increased and per capita income has also increased but at a slower rate
D.	national income and per capita income have increased every year
Answer» C. national income has increased and per capita income has also increased but at a slower rate

17.	Which of the following expenses do not require the sanction of Parliament? I. Salary and allowances of the President and CAG II. Debt charges of the Government III. Defence expenditure IV. Maintenance expenditure of embassies
A.	I, II, III, IV
B.	I, II, III
C.	I, II
D.	II, IV
Answer» C. I, II

12.	A tax Which is paid by the person on whom the tax is incident is called a :
A.	local tax
B.	indirect tax
C.	direct tax
D.	rate
Answer» C. direct tax

14.	The standard of living in a country is represented by its:
A.	national income
B.	per capita income
C.	poverty ratio
D.	unemployment rate
Answer» B. per capita income

18.	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.	finance bill
B.	money bill
C.	appropriation bill
D.	credit budget bill
Answer» C. appropriation bill

19.	By which bill does the government make arrangement for the collection of revenues for a year?
A.	Supplementary Budget
B.	Finance Bill
C.	Fiscal Budget
D.	Economic Bill
Answer» B. Finance Bill

20.	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.	vote on account
B.	complementary budget
C.	supplementary budget
D.	contingency budget
Answer» A. vote on account

21.	On account of some national emergency or in order to carry out some secret mission, the government sometimes requires funds but may not give the details of the expenditure estimates. The House grants some lumpsum for this called :
A.	emergency budget
B.	vote of Credit
C.	contingency bill
D.	supplementary budget
Answer» B. vote of Credit

22.	Consider the following statements: (A) In India since independence the share of the primary sector has been declining while the shares. of the secondary and tertiary sectors have been increasing (B) This trend shows that Indian economy is passing through the transition from an agricultural to an industrial economy While one of the following is correct?
A.	both A and Bare correct
B.	both A and Bare wrong
C.	A is correct, B is wrong
D.	A is wrong, B is correct
Answer» A. both A and Bare correct

23.	Which of the following gives a correct picture of the share of various sectors in economic growth in India over the years? 1. Primary sector-stagnant 2. Secondary sector-increasing 3. Tertiary sector-decreasing
A.	1 and 2
B.	2 and 3
C.	2 only
D.	1 only
Answer» C. 2 only

24.	Which of the following is wrongly matched?
A.	Cess-a compulsory levy collected by the government for a particular purpose from all persons
B.	Rate-a compulsory levy collected by the government from the beneficiaries of particular schemes
C.	Corporation tax-levied by corporations for civic amenities
D.	Proportional tax-a tax levied at the same time at all levels of the base
Answer» C. Corporation tax-levied by corporations for civic amenities

25.	The basic attribute of a formal organization is : [CPO AC 2003]
A.	esteem and prestige
B.	roles and duties
C.	dominance and supremacy
D.	rules and regulations
Answer» D. rules and regulations

170+ Fiscal System of India Solved MCQs

Which of the following is the basis for determining the national income?

Which of the following is not a method of estimating national income? [I. Tax & Central Excise 1991]

The national income of India is estimated mainly through: [CBI 1993]

Which of the following are referred to as the developed economies?

An advalorem duty is a tax on the basis of: [IAS 1988]

Which of the following is not true about 'vote-on-account'? [Bank PO 1991]

The system of Budget was introduced in India during the viceroyalty of: [Central Excise 1994]

Which one of the following statements is correct? Fiscal Responsibility and Budget Management Act (FRBMA) concerns [IAS 2006]

Temporary tax levied to obtain additional revenue is called:

A tax Which is paid by the person on whom the tax is incident is called a :

Rate of growth of an economy is measured in terms of:

The standard of living in a country is represented by its:

Which is the best measure of economic growth of a country ?

Since 1951, in India:

Which of the following expenses do not require the sanction of Parliament? I. Salary and allowances of the President and CAG II. Debt charges of the Government III. Defence expenditure IV. Maintenance expenditure of embassies

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:

By which bill does the government make arrangement for the collection of revenues for a year?

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:

On account of some national emergency or in order to carry out some secret mission, the government sometimes requires funds but may not give the details of the expenditure estimates. The House grants some lumpsum for this called :

Which of the following gives a correct picture of the share of various sectors in economic growth in India over the years? 1. Primary sector-stagnant 2. Secondary sector-increasing 3. Tertiary sector-decreasing

Which of the following is wrongly matched?

The basic attribute of a formal organization is : [CPO AC 2003]

If the price of an inferior good falls, its demand: [CPO SI 2003]

The existence of a Parallel Economy or Black Money: [CPO SI 2003]

Put the main sources of revenue of the Central Government in ascending order of importance: 1. Income tax 2. Corporation tax 3. Customs 4. Excise duties

The highest sector wise contribution to gross domestic saving comes from:

An amount given by a government agency or even private body to encourage a particular economic activity is a :

Why has the general budget till recently always been presented at 5 o’ clock in the evening?

Which of the following would signify scarcity in economics?

The per capita income has been low in India because:

The rate of growth of the tertiary sector has been:

Since independence, both development and non-development expenditures have Increased, the increase in the former being a little more than in the other. Non development expenditure involves: 1. interest payment 2. subsidies 3. defence 4. irrigation

Which among the following formulates fiscal policy?

Which among the following is the regulatory authority for giving clearance for External Commercial borrowing?

The Zero Base Budgeting in India was first experimented from:

The prices at which the government purchases food grains for maintaining the public distribution system and for building up buffer stocks are known as :

Who is the chairman of 13th Finance Commission?

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]

'Balanced Growth' means:

Increase in Oil Pool Deficit implies:

Dear Money Policy implies:

Which of the following is wrongly matched:

Railway Budget in India was separated from general budget in :

In recent years the capital outlays for the defence service have been:

Which one of the following is the most important item of non-plan expenditure?

Which among the following is true? 1. Decrease in cash reserve ratio injects higher liquidity in the system 2. Higher liquidity in the system may soften interest rates 3. Higher market borrowing by the government leads to rise in interest rates Choose your answer from:

One of the problems in calculating the national income in India correctly is : [Railways 1994]

Which of the following expenses do not require the sanction of Parliament?
I. Salary and allowances of the President and CAG
II. Debt charges of the Government
III. Defence expenditure
IV. Maintenance expenditure of embassies

Which of the following gives a correct picture of the share of various sectors in economic growth in India over the years?
1. Primary sector-stagnant
2. Secondary sector-increasing
3. Tertiary sector-decreasing

Put the main sources of revenue of the Central Government in ascending order of importance:
1. Income tax
2. Corporation tax
3. Customs
4. Excise duties

Since independence, both development and non-development expenditures have Increased, the increase in the former being a little more than in the other. Non development expenditure involves:
1. interest payment
2. subsidies
3. defence
4. irrigation

26.	If the price of an inferior good falls, its demand: [CPO SI 2003]
A.	rises
B.	falls
C.	remains constant
D.	can be any of the above
Answer» C. remains constant

27.	The existence of a Parallel Economy or Black Money: [CPO SI 2003]
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» B. makes the monetary policies less effective

28.	Put the main sources of revenue of the Central Government in ascending order of importance: 1. Income tax 2. Corporation tax 3. Customs 4. Excise duties
A.	1, 2, 3, 4
B.	3, 2, 4, 1
C.	4, 3, 1, 2
D.	4, 3, 2, 1
Answer» D. 4, 3, 2, 1

29.	The highest sector wise contribution to gross domestic saving comes from:
A.	private corporate sector
B.	household sector
C.	public sector
D.	cooperative sector
Answer» B. household sector

30.	An amount given by a government agency or even private body to encourage a particular economic activity is a :
A.	grant
B.	loan
C.	subsidy
D.	mutual fund
Answer» C. subsidy

31.	Why has the general budget till recently always been presented at 5 o’ clock in the evening?
A.	All countries present their budgets at this time
B.	So that there is no time for traders to manipulate the prices
C.	It is a convention of official secrecy
D.	It is a carry-over from times of British rule when the Budget could be discussed in the British Payment simultaneously
Answer» D. It is a carry-over from times of British rule when the Budget could be discussed in the British Payment simultaneously

32.	Which of the following would signify scarcity in economics?
A.	Production of 100 kg of a certain item instead of the targeted 150 kg
B.	Availability of 10 kg of rice against a demand for 15 kg
C.	Availability of post-graduates for jobs of typists
D.	Quantity supplied remains the same when price changes
Answer» B. Availability of 10 kg of rice against a demand for 15 kg

33.	The per capita income has been low in India because:
A.	of population growth
B.	of price rise
C.	more people are in rural areas
D.	of regional imbalances
Answer» A. of population growth

34.	The rate of growth of the tertiary sector has been:
A.	higher than the overall rate of growth of the net domestic product
B.	lower than the overall rate of growth of the net domestic product
C.	same as the overall rate of growth of the net domestic product
D.	fluctuating when compared to growth of net domestic product
Answer» A. higher than the overall rate of growth of the net domestic product

36.	Which among the following formulates fiscal policy?
A.	RBI
B.	Finance Ministry
C.	SEBI
D.	Planning Commission
Answer» B. Finance Ministry