Indian Economy objective part 7

101. The 'gilt-edged' market deals in : [UP PCS 2002]
(a) worn and torn currency notes
(b) bullion
(c) Govt. securities
(d) Corporate bonds
Ans: (b)
102. 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
Ans: (a)
103. Investment in public works is known as :
(a) revenue expenditure
(b) capital expenditure
(c) current expenditure
(d) either (a) or (b)
Ans: (b)
104. The rising prices in India can be checked through:
1. Budgetary policy
2. Monetary policy
3. Increasing production
4. Increasing income levels
Choose your answer from:



(a) 1 and 2
(b) 1, 2 and 3
(c) 1, 2, 3 and 4
(d) 2 and 3
Ans: (b)
105. A budgetary deficit means:
(a) total expenditure is more than total revenue
(b) current expenditure is more than current revenue
(c) capital expenditure is more than capital revenue
(d) total expenditure is more than current revenue
Ans: (a)
106. Fiscal deficit in the budget means: [CDS 1999]
(a) Revenue deficit plus the net borrowings of the government
(b) Budgetary deficit plus the net borrowings of the government
(c) Capital deficit plus revenue deficit
(d) Primary deficit minus capital deficit
Ans: (b)
107. 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
Ans: (c)
108. Among the structural changes which of the following is not wholly welcome?
(a) Increase in the share of construction in the GNP
(b) Relative contribution of agriculture to our GNP is declining
(c) Marked improvement in the contribution of manufacturing to the GNP
(d) Substantial increase in the percentage contribution of public administration and defence
to GDP
Ans: (d)
109. Net factor income from abroad added to GDP gives:
(a) GNP
(b) NNP
(c) NDP
(d) per capita income
Ans: (a)
110. Gross National Income is always more than Net National Income because it includes:



(a) foreign income
(b) capital consumption allowance
(c) indirect taxes
(d) direct taxes
Ans: (b)
111. Gross National Product at market prices is defined as : [CPO AC 2003]
(a) the market value of all final goods and services produced in an economy taking into
account net factor income from abroad
(b) the market value of all final goods and services produced in an economy
(c) the market value of all final goods and services produced in an economy plus indirect
taxes
(d) the market value of all final goods and services produced in an economy plus indirect
taxes minus subsidies
Ans: (a)
112. 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.
Ans: (a)
113. National income calculated at current prices in India has shown a tendency to rise at a
faster rate than national income at constant prices. This is because:
(a) India's population has been rising fast
(b) General price level in the economy has been rising rapidly
(c) Statistically manipulations are employed by the Planning
(d) Base year chosen is an abnormal year
Ans: (b)
114. The measure of a worker's real wage is : [CPO SI 2002]
(a) the change in his productivity over a given time
(b) his earning after deduction at source
(c) his daily earnings
(d) the purchasing power of his earnings
Ans: (d)
115. Real national income denotes:
(a) national income at constant prices
(b) per capita income
(c) national income at current prices
(d) net factor income


Ans: (a)
116. Under VAT, how many slabs are there?
(a) 3
(b) 4
(c) 2
(d) 5
Ans: (b)
117. 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
Ans: (b)
118. Gross National Product is less than Gross Domestic Product depending upon whether:
(a) indirect taxes are more than subsidies
(b) depreciation is included or not
(c) net factor income from abroad is positive or negative
(d) indirect taxes are less than subsides
Ans: (c)
119. One of the following leads to underestimation of national income in India:
1. Inflation
2. Devaluation
3. Non-Monetary consumption
4. Large unorganized sector
Choose correct answer from:
(a) 1, 2, 3 and 4
(b) 1, 3 and 4
(c) 3 and 4
(d) 2, 3 and 4
Ans: (c)
120. Match the following:
A. Fiscal Deficit 1. Difference between Total Expenditure and total receipts
B. Budget Deficit 2. Difference between Revenue Expenditure and Revenue Receipt
C. Revenue Deficit 3. Difference between Total Expenditure and Revenue Receipts plus non-debt
creating capital receipts


D. Primary Deficit 4. Difference between Total Expenditure and Revenue Receipts plus non-debt
creating capital receipts minus interest payments
A B C D
(a) 3 1 2 4
(b) 4 3 2 1
(c) 1 3 2 4
(d) 3 1 4 2
Ans: (a)
121. Which of the following schemes was intended to tap the black money?
(a) SBI Deposit Scheme
(b) UTI Bonds
(c) Long term Operations Scheme
(d) India Development Bonds
Ans: (d)
122. 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
Ans: (a)
123. 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
Ans: (d)
124. National Income total reveals:
1. Production side of the economy
2. Distribution side of the economy
3. Expenditure side of the economy
Choose your answer from
(a) 1 only
(b) 2 only
(c) 1, 2 and 3
(d) 3 only
Ans: (b)


125. Octroi is levied and collected by:
(a) Centre
(b) State Government
(c) local bodies
(d) all the above
Ans: (c)
126. What is meant by 'Underwriting', the term frequently used in financial sector? [Punjab
& Sindh Bank 2011]
(1) Under valuation of the assets.
(2) The Act of taking on a risk for a fee.
(3) Giving a Guarantee that a loan will not become a bad loan.
(4) The act of permission to float an IPO.
(5) None of the above
Ans: (1)
127. What is a fiscal deficit? [Punjab & Sindh Bank 2011]
(1) It is a gap between the values of the exports and imports
(2) It is a gap between exports and imports minus external borrowings
(3) It is a gap between total expenditure and total receipts of the Govt.
(4) It is a gap between total receipts minus External Borrowing
(5) None of the above
Ans: (3)
128. Which one of the following organizations/agencies' are involved in drafting the Union
Budget of India? [Punjab & Sindh Bank 2011]
(1) The Planning Commission only
(2) The Comptroller and Auditor General only
(3) Administrative Ministries only
(4) (1) & (2) only
(5) All (1), (2) & (3)
Ans: (3)
129. 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]
(1) Fuel
(2) Food items
(3) Manufactured items
(4) Primary Articles
(5) All of these
Ans: (2)
130. Which one of the following is the updated base for Wholesale Price Index (WPI) ?



[Corporation Bank PO 2011]
(1) 2002-2003
(2) 2003-2004
(3) 2004-2005
(4) 2005-2006
(5) 2006-2007
Ans: (3)
131. 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
Ans: (a)
132. Development is : [CDS 1999]
(a) synonymous with economic growth
(b) narrower than economic growth
(c) wider than economic growth
(d) not related to economic growth
Ans: (c)
133. In the short run, a producer continues his production as long as he covers: [Asstt Grade
1992]
(a) variable cost
(b) fixed cost
(c) average cost
(d) marginal cost
Ans: (b)
134. 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
Ans: (b)
135. What is 'Recession'?
(a) Rise in the cost of production, especially because of wage increase
(b) Increase in money supply without a matching increase in production
(c) Reduction in production and employment for want of sufficient demand for goods
(d) None of these



Ans: (c)
136. 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
Ans: (a)
137. The Indian budget includes:
(a) revised estimates for the current year
(b) budget estimates for the following year
(c) actual figures of the preceding year
(d) all of these
Ans: (d)
138. Funds belonging to Government of India are kept in:
1. Consolidated Fund of India
2. Public Account Fund of India
3. Contingency Fund of India
(a) 1 and 2
(b) 2 and 3
(c) 1 and 3
(d) 1, 2 and 3
Ans: (d)
139. A deflator is a technique of: [IAS 1992]
(a) adjusting for changes in price level
(b) adjusting for change in commodity
(c) accounting for higher increase of GNP
(d) accounting for decline of GNP
Ans: (a)
140. Buyer's market denotes the place where:
(a) the supply exceeds the demand
(b) the demand exceeds the supply
(c) the demand and supply are well balanced
(d) commodities are available at competitive rates
Ans: (b)
141. Deficit financing is spending:
(a) by getting foreign aid
(b) less than what is needed



(c) in excess of revenue
(d) by borrowing from abroad
Ans: (c)
142. Main bearers of the burden of indirect tax are:
(a) manufacturers
(b) traders
(c) consumes
(d) tax payers
Ans: (c)
143. A tax that takes away a higher proportion of one's income as the income rises is termed
as [I. Tax & Central Excise 1990]
(a) indirect tax
(b) progressive tax
(c) regressive tax
(d) proportional tax
Ans: (b)
144. The Indian income tax is :
1. direct
2. progressive
3. indirect
4. proportional
(a) 1and 2
(b) 1and 4
(c) 2 and 3
(d) 3 and 4
Ans: (a)
145. Excise Duties are taxes on :
(a) sale of commodities
(b) export of commodities
(c) production of commodities
(d) import of commodities
Ans: (c)
146. The minimum effect of Direct Taxes is on :
(a) food price
(b) consumer goods
(c) capital goods
(d) income



Ans: (d)
147. Companies pay Corporation Tax on their: [UDC 1993]
(a) investment
(b) production
(c) sales proceeds
(d) incomes
Ans: (d)
148. 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
Ans: (d)
149. Fresh evalution of every item of expenditure from the very beginning of each financial
year is called: [SBI PO 1991]
(a) fresh Budgeting
(b) deficit Budgeting
(c) performance Budgeting
(d) zero-based Budgeting
Ans: (d)
150. The rate of growth of per capita income is equal to:
(a) Rate of growth of national income divided by the rate of growth of population
(b) Growth in national income divided by the increase in population
(c) Rate of growth of national income minus the rate of growth of population
(d) Rate of growth of national income
Ans: (c)
151. Consider the following statements relating to estimation of National Income :
1. Foreigners working in Indian Embassies are normal residents of India.
2. Foreigners working in the office of WHO, World Bank. UNO etc. located in India are not
normal residents of India.
3. Indians working in foreign embassies in India are not normal residents of India.
Which of the statements given above is/are correct? [CDS 2010]
(a) 1 only
(b) 1 and 2


(c) 3 only
(d) 1, 2 and 3
Ans: (b)
152. Consider the following items of wholesale price index: [Asstt Commt 2010]
1. Primary articles
2. Fuel, power, lights and lubricants
3. Manufacturing products
Arrange the above items in descending order in terms of their weightage in calculating
wholesale price index
(a) 1, 2, 3
(b) 1, 3, 2
(c) 3, 1, 2
(d) 3, 2, 1
Ans: (b)
153. When the Reserve Bank of India announces an increase of the Cash Reserve 'Ratio,
what does it mean? [IAS 2010]
(a) The commercial banks will have less money to lend
(b) The Reserve Bank of India will have less money to lend
(c) The Union Government will have less money to lend
(d) The commercial banks will have more money to lend
Ans: (a)
154. In India, the tax proceeds of which one of the following as a percentage of gross tax
revenue has significantly declined in the last five years? [IAS 2010]
(a) Service tax
(b) Personal income tax
(c) Excise duty
(d) Corporation tax
Ans: (c)
155. Consider the following statements:
In India, taxes on transactions in Stock Exchanges and Futures Markets are
1. levied by the Union
2. collected by the States
Which of the statements given above is/are correct? [IAS 2010]
(a) 1 only
(b) 2 only



(c) Both 1 and 2
(d) Neither 1 nor 2
Ans: (a)
156. With reference to Indian economy, consider the following statements:
1. The Gross Domestic Product (GDP) has increased by four times in the last 10 years.
2. The percentage share of Public Sector in GDP has declined in the last 10 years.
Which of the statements given above is/are correct? [IAS 2010]
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Ans: (b)
157. Which of the following statements is/are correct?
1. If a country is experiencing increase in its per capita GDP, its GDP must necessarily be
growing.
2. If a country is experiencing negative inflation, its GDP must be decreasing.
Select the correct answer using the code given below: [CDS 2012]
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Ans: (d)
158. National income ignores [CDS 2012]
(a) sales of firm
(b) salary of employees
(c) exports of the IT sector
(d) sale of land
Ans: (b)
159. An individual's actual standard of living can be assessed by [SSC Grad 2011]
(a) Gross National Income
(b) Net National Income
(c) Per Capita Income
(d) Disposable Personal Income
Ans: (d)
160. Consider the following statements about Sinking Fund:



1. It is a method of repayment of public debt.
2. It is created by the government out of budgetary revenues every year.
Which of the statements given above is/are correct? [CDS 2011]
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Ans: (c)
161. Which one among the following is not a component of fiscal policy? [Asstt Commdt
2011]
(a) Taxation policy
(b) Public debt policy
(c) Trade policy
(d) Public expenditure policy
Ans: (c)
162. The total value of goods and services, produced' in a country during a given period is
[CPO SI 2011]
(a) Disposable income
(b) National income
(c) Per capita income
(d) Net national income
Ans: (b)
163. In the context of Indian economy, consider the following statements:
1. The growth rate of GDP has – steadily increased in the last five years.
2. The growth rate in per capita income has steadily increased in the last five years.
Which of the statements given above is/are correct? [CSAT2011]
(a) 1only
(b) 2 only
(c) Both 1and 2
(d) Neither 1 nor 2
Ans: (d)
164. Economic growth is usually coupled with [CSAT 2011]
(a) deflation
(b) inflation
(c) stagflation



(d) hyperinflation
Ans: (b)
165. In terms of economy, the visit by foreign nationals to witness the XIX Common Wealth
Games in India amounted to [CSAT 2011]
(a) Export
(b) Import
(c) Production
(d) Consumption
Ans: (a)
166. Which one of the following statements appropriately describes the "fiscal stimulus"?
[CSAT 2011]
(a) It is a massive investment by the Government in manufacturing sector to ensure the
supply of goods to meet the demand surge caused by rapid economic growth
(b) It is an intense affirmative action of the Government to boost economic activity in the
country
(c) It is Government's intensive action on financial institutions to ensure disbursement of
loans to agriculture and allied sectors to promote greater food production and contain food
inflation
(d) It is an extreme affirmative action by the Government to pursue- its policy of financial
inclusion
Ans: (b)
167. Consider the following actions which the Government can take:
1. Devaluing the domestic currency.
2. Reduction in the export subsidy.
3. Adopting suitable policies which attract greater FDI and more funds from FIIs.
Which of the above action/actions can help in reducing the current account deficit? [CSAT 2011]
(a) 1 and 2
(b) 2 and 3
(c) 3 only
(d) 1 and 3
Ans: (d)
168. A rapid increase in the rate of inflation is sometimes attributed to the "base effect".
What is "base effect"? [CSAT 2011]
(a) It is the impact of drastic deficiency in supply due to failure of crops
(b) It is the impact of the surge in demand due to rapid economic growth
(c) It is the impact of the price levels of previous year on the calculation of inflation rate



(d) None of the statements (a), (b) and (c) given above is correct in this context
Ans: (c)
169. 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
Ans: (d)
170. The National Income is more at current prices than at constant prices because: [CDS
1992]
(a) increase in price is equal to increase in production
(b) increase in price is more than production
(c) increase in production is more than increase in price
(d) of decrease in production only
Ans: (c)
171. The first estimate of national income in India was made by:
(a) Mahalanobis
(b) V.K.R.V. Rao
(c) Dadabhai Naoroji
(d) Prof. Sheroi
Ans: (c)
172. The per capita income is obtained by:
(a) summing up the income of all the citizens of the country
(b) dividing national income by the population
(c) estimating the minimum income of individual citizens
(d) dividing the total national capital with the profit earned
Ans: (b)
173. Which of the following is correct regarding the Gross Domestic Saving In India? [Asstt
Grade 1992]
(a) Contribution of Household sector is the largest
(b) Contribution of Government sector is the largest
(c) Contribution of Corporate sector is the largest
(d) None of these
Ans: (a)



174. Which of the following is not required while computing Gross National Product (GNP)?
[Asstt Grade 1992]
(a) Net foreign investment
(b) Private investment
(c) Per capita income of citizens
(d) Purchase of goods by government
Ans: (c)
175. National income is the same as:
(a) Net Domestic Product at market price
(b) Net Domestic Product at cost factor
(c) Net National Product at market price
(d) Net National Product at factor cost
Ans: (d)
176. The sum total of incomes received for the services of labour, land or capital in a country
is called:
(a) gross domestic product
(b) national income
(c) gross domestic income
(d) gross national income
Ans: (b)
177. Which of the following is not shared by the Centre and the States?
(a) Sales Tax
(b) Corporation Tax
(c) Income Tax
(d) Union Excise Duties
Ans: (a)
178. Which of the following taxes is not levied by the Union Government?
(a) Wealth Tax
(b) Excise Duty
(c) Profession Tax
(d) Income Tax
Ans: (c)
179. 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



Ans: (b)
180. Which of the following is an indirect tax?
(a) Corporation Tax
(b) Excise Duty
(c) Wealth Tax
(d) Capital Gains Tax
Ans: (b)



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