Economics GK Quiz-23

1. How the interest-level of a country is affected by FDI ?
(1) increases
(2) decreases
(3) remains unaffected
(4) there is increase or decrease
Answer:
1. (2) A higher international interest rate will decrease
FDI since it means a higher cost of fund in
international market, and vice versa. Interest rate is
a measure of the cost of capital. A higher interest
rate implies more costly investment and, therefore,
the higher the interest rate, the more it is likely to
defer FDI and the relationship between FDI and the
interest rate is expected to be negative. Love and
Lage-Hidalgo (2000) and Erdal and Tatoglu (22002),
amongst others, find that an increase in the interest
rate leads to a decrease in FDI. Interest rate and
FDI can both be the cause and effect of other.


(SSC Section Officer (Audit)
Exam. year 1997)
2. If people’s income of a country
is denoted in a curved line
space that it has increased, then
what does it denote?
(1) the income is increasing
(2) the income is decreasing
(3) dissimilarity is decreasing
in income distribution
(4) dissimilarity in income distribution is increasing
Answer:
2. (3) It shows inequality in income distribution. Inequality
indices can also be derived directly from the Lorenz
curve. Perhaps the most commonly-used inequality
index is the Gini coefficient, which ranges from 0
(perfect equality) to 1 (perfect inequality). It is the ratio
of the area enclosed by the Lorenz curve and the
perfect equality line to the total area below that line.


(SSC Section Officer (Audit)
Exam. year 1997)ECONOMICS
SGAE–581
3. A financial instrument is called
a ‘primary security’ if it represents the liability of :
(1) some ultimate borrower
(2) the Government of India
(3) a primary cooperative bank
(4) a commercial bank
Answer:
3. (1) Instruments (certificates) issued by the ultimate
borrower are called primary securities. Instruments
issued by intermediaries on behalf of the ultimate
borrower are called indirect securities. The market
for instruments (also called securities) issued for the
first time, is called the primary market. Primary
security is the asset created out of the credit facility
extended to the borrower and / or which are directly
associated with the business / project of the borrower
for which the credit facility has been extended.


(SSC Combined Graduate Level
Prelim Exam. 04.07.1999
(First Sitting)
4. Indirect tax means :
(1) there is not direct relationship between the tax payer
and the government.
(2) direct relationship between
tax payer and the government.
(3) tax base is income
(4) the incidence and impact
are on the same person on
whom tax is imposed.
Answer:
4. (1) The term indirect tax has more than one meaning.
In the colloquial sense, an indirect tax (such as sales
tax, a specific tax, value added tax (VAT), or goods
and services tax (GST)) is a tax collected by an
intermediary (such as a retail store) from the person
who bears the ultimate economic burden of the tax
(such as the consumer). The intermediary later files
a tax return and forwards the tax proceeds to
government with the return. In this sense, the term
indirect tax is contrasted with a direct tax which is
collected directly by government from the persons
(legal or natural) on which it is imposed.


(SSC Combined Graduate Level
Prelim Exam. 04.07.1999
(Second Sitting)
5. Which one of the following is
NOT an example of indirect tax?
(1) Sales tax
(2) Excise duty
(3) Customs duty
(4) Expenditure tax
Answer:
5. (4) Expenditure tax is a taxation plan that replaces
the income tax (a direct tax). Instead of applying a
tax based on the income earned, tax is allocated based
on the rate of spending. This is different from a sales
tax, which is applied at the time the goods or services
are provided and is considered a consumption tax.
The major benefit for this type of tax scheme is the
removal of double taxation.


(SSC Combined Graduate Level
Prelim Exam. 27.02.2000
(Second Sitting)
6. Interest on public debt is a part
of :
(1) transfer payments by the
enterprises
(2) transfer payments by the
Govt.
(3) national income
(4) interest payments by
households
Answer:
6. (2) In economics, a transfer payment (or government
transfer or simply transfer) is a redistribution of income
in the market system. These payments are considered
to be exhaustive because they do not directly absorb
resources or create output. In other words, the
transfer is made without any exchange of goods or
services. Examples of certain transfer payments
include welfare (financial aid), interest on public debt,
social security, and government making subsidies
for certain businesses (firms).


(SSC Combined Graduate Level
Prelim Exam. 27.02.2000
(Second Sitting)
7. A tax is characterised by horizontal equity if its liability is
(1) proportional to the income
of tax payers
(2) similar for tax payers in
similar circumstances
(3) proportional to the expenditure of tax payers
(4) the same for every tax payer
Answer:
7. (1) The principle of equity includes both horizontal
and vertical. Equity is determined by first assessing
an individual’s ability-to-pay. The idea of the abilityto-pay principle considers whether or not it is fair to
tax someone higher just because that person has the
ability and resources to pay. If it is decided that they
should be required to pay more, the question of how
much more arises. These questions can be analyzed
through horizontal and vertical equity which are
subsets of the ability-to-pay principle. Horizontal
equity suggests it is fair for people of equal ability to
pay the same amount in taxes. Vertical equity is the
idea that people who has a higher ability to pay more
than those who have a lower ability to pay, as long as
the increase in tax level is considered to be
reasonable.


(SSC Section Officer (Audit)
Exam. 09.09.2001)
8. What does a Leasing Company
provide ?
(1) Machinery and capital
equipment on hire
(2) Legal guidance in establishing an enterprise
(3) Office accommodation on
hire
(4) Technical consultancy and
experts for a fee
Answer:
8. (1) Leasing is a process by which a firm can obtain
the use of a certain fixed assets for which it must
pay a series of contractual, periodic, tax deductible
payments. Equipment leasing is a financing
alternative for businesses to acquire needed
machinery while saving precious operating capital.
Leasing provides opportunities to use available money
to operate assets that can make more money over
time. There are many distinct differences between
buying and leasing, regardless if such a transaction
or agreement applies to property, machinery,
equipment or other assets. The difference lies in that
a lease is conceptually very similar to the principle of
“borrowing.” The ownership of the leased property
(be it land, equipment, merchandise, or etc.) is not
transferred under the terms of the lease agreement.


(SSC Section Officer (Audit)
Exam. 09.09.2001)
9. Buoyancy of a tax is defined as
(1) percentage increase in tax
revenue/percentage increase in tax base
(2) increase in tax revenue/
percentage increase in tax
coverage
(3) increase in tax revenue/increase in tax base
(4) percentage increase in tax
revenue/ increase in tax
coverage
Answer:
9. (3) Buoyancy means the growth/increase in tax
collections. This is in line with the GDP growth within
the economy, the industry profile and the tax
structure administered by the government. Tax
buoyancy measures the total response of tax revenues
to changes in national income. Total response takes
into account both increases in income and
discretionary changes (i.e., tax rates and bases) made
by tax authorities in the system. The responsiveness
of tax revenues to discretionary changes in the tax
rate and in the tax base in relation to the GDP is
termed the buoyancy of the tax system. Therefore,
tax buoyancy is a measure of both the soundness of
the tax bases and the effectiveness of tax changes in
terms of revenue collection. Tax elasticity, on the
other hand, measures the pure response of tax
revenues to changes in the national income.


(SSC Section Officer (Audit)
Exam. 09.09.2001)
10. What is referred to as “Depository Services” ?
(1) A new scheme of fixed deposits
(2) A method of regulating
stock exchanges
(3) An agency for safe-keeping
of securities
(4) An advisory service to investors
Answer:
10. (3) A Central Securities Depository (CSD) is an
organization holding securities either in certificated
or un-certificated (dematerialized) form, to enable book
entry transfer of securities. In some cases these
organizations also carry out centralized comparison,
and transaction processing such as clearing and
settlement of securities. The physical securities may
be immobilized by the depository, or securities may
be dematerialized (so that they exist only as electronic
records). The following are depository services: Demat
accounts; dematerialization; rematerialization; transfer
of securities; and pledge services.


(SSC Combined Graduate Level
Prelim Exam. 11.05.2003
(Second Sitting)
11. The existence of a Parallel Economy or Black Money
(1) makes the economy more
competitive
(2) makes the monetary policies
less effective
(3) ensures a better distribution of income and wealth
(4) ensures increasing productive investment
Answer:
11. (2) In India, Black money refers to funds earned on
the black market, on which income and other taxes
has not been paid. Black money leads to black liquidity
which is immune to any monetary-fiscal policy. It
can move around in the economy creating excess
demand in several vulnerable sectors of the economy.
Of particular relevance in this context is a policy
dominated by sector-wise credit rationing in order to
maintain inter-sectoral balances. The cost of credit
is one one part of such a policy. So, in nutshell, the
existence of parallel economy erodes the effectiveness
of monetary policies.


(SSC CPO Sub-Inspector
Exam. 07.09.2003)
12. An economy is in equili-brium
when
(1) planned consumption exceeds planned saving
(2) planned consumption exceeds planned investment
(3) intended investment equals
intended investment
(4) intended investment exceeds intended savings
Answer:
12. (3) In economics, economic equilibrium is a state of
the world where economic forces are balanced and
in the absence of external influences the (equilibrium)
values of economic variables will not change. The
condition of equilibrium of income is the equality of
intended saving and intended investment. An economy
is in equilibrium when total savings equal total
investment.


(SSC CPO Sub-Inspector
Exam. 07.09.2003)
13. The incidence of sales tax falls
on
(1) Consumers
(2) Wholesale dealers
(3) Retail dealers
(4) Producers
Answer:
13. (1) In economics, tax incidence is the analysis of the
effect of a particular tax on the distribution of economic
welfare. Tax incidence is said to “fall” upon the group
that ultimately bears the burden of, or ultimately has
to pay, the tax. The key concept is that the tax
incidence or tax burden does not depend on where
the revenue is collected, but on the price elasticity of
demand and price elasticity of supply. A tax on the
sale of goods (sales tax, excise tax) will ultimately be
paid by either the consumer or the firm based on
elasticities, regardless of who the government actually
levies the tax on. If the consumer ultimately pays the
tax, it means that the tax incidence falls on the
consumer. If the firm ultimately pays the tax, it means
that the tax incidence ultimately falls on the firm.


(SSC Section Officer (Commercial
Audit) Exam. 16.11.2003)
14. Government securities are considered liquid because they are
(1) backed by the Government
treasury
(2) convertible into other types
of saving deposits
(3) quickly and easily marketable
(4) stable in value
Answer:
14. (3) Liquid Asset is an asset that can be converted into
cash quickly and with minimal impact to the price
received. In a liquid market, assets can be easily
converted without considerable price fluctuation, and
with a minimal decline in worth. A liquid market is a
type of market that possesses a high level of stability,
and low spreads between asking and selling prices.
Securities issued by the Government are considered
risk-free, and as such, their yields are often used as
the benchmarks for fixed- income securities with the
same maturities. The government securities market
constitutes a key segment of the financial market,
heavily traded offering virtually credit risk-free highly
liquid financial instruments, which market participants
are more willing to transact and take positions.


(SSC Section Officer (Commercial
Audit) Exam. 16.11.2003)
15. State which of the following is
correct ? The Consumer Price
Index reflects :
(1) the standard of living
(2) the extent of inflation in the
prices of consumer goods
(3) the increasing per capita
income
(4) the growth of the economy
Answer:
15. (2) A consumer price index (CPI) measures changes
in the price level of consumer goods and services
purchased by households. The annual percentage
change in a CPI is used as a measure of inflation. A
CPI can be used to index (i.e., adjust for the effect of
inflation) the real value of wages, salaries, pensions,
for regulating prices and for deflating monetary
magnitudes to show changes in real values.


(SSC Section Officer (Commercial
Audit) Exam. 16.11.2003)
16. What are the main components
of basic social infrastructure of
an economy ?
(1) Education, Industry and
Agriculture
(2) Education, Health and Civil amenities
(3) Transport, Health and
Banks
(4) Industry, Trade and Transport
Answer:
16. (2) Social infrastructure refers to the facilities and
mechanisms that ensure education, health care,
community development, income distribution,
employment and social welfare. It includes health
care system, including hospitals, the financing of
health care, including health insurance, the systems
for regulation and testing of medications and medical
procedures; the educational and research system,
including elementary and secondary schools,
universities, specialised colleges, research
institutions; Social welfare systems; Sports and
recreational infrastructure, such as parks, sports
facilities, the system of sports leagues and
associations; Cultural infrastructure; and business
travel and tourism infrastructure, including both manmade and natural attractions, etc.


(SSC Section Officer (Audit)
Exam. 14.12.2003)
17. Basic infrastructure facilities in
Economics are known as :
(1) Human capital
(2) Physical capital
(3) Social overheads capital
(4) Working capital
Answer:
17. (3) Social overheads capital is the capital spent on
social infrastructure, such as schools, universities,
hospitals, libraries. They are capital goods of types
which are available to anybody, hence social; and
are not tightly linked to any particular part of
production, hence overhead. Because of their broad
availability they often have to be provided by the
government. Examples of social overhead capital
include roads, schools, hospitals, and public parks.


(SSC Section Officer (Audit)
Exam. 14.12.2003)
18. Evaluating all the options to find
out most suitable solution to
business problems is inter-displinary activities. It is called
(1) Professional research
(2) Management research
(3) Operational research
(4) Commercial research
Answer:
18. (3) Operational research is a discipline that deals with
the application of advanced analytical methods to help
make better decisions. Employing techniques from
other mathematical sciences, such as mathematical
modeling, statistical analysis, and mathematical
optimization, operations research arrives at optimal
or near-optimal solutions to complex decision-making
problems. In a nutshell, operations research (O.R.)
is the discipline of applying advanced analytical
methods to help make better decisions.


(SSC Section Officer (Audit)
Exam. 14.12.2003)
19. Deficit financing is an instrument of
(1) monetary policy
(2) credit policy
(3) fiscal policy
(4) tax policy
Answer:
19. (3) In economics, fiscal policy is the use of government
revenue collection (taxation) and expenditure
(spending) to influence the economy. The two main
instruments of fiscal policy are government taxation
and expenditure. Deficit financing is defined as
financing the budgetary deficit through public loans
and creation of new money. Deficit financing in India
means the expenditure which in excess of current
revenue and public borrowing.


(SSC CPO Sub-Inspector
Exam. 26.05.2005)ECONOMICS
SGAE–582
20. Interest on public debt is part of
(1) Transfer payments by the
enterprises
(2) Transfer payments by the
government
(3) National income
(4) Interest payments by
households
Answer:
20. (2) In economics, a transfer payment (or government
transfer or simply transfer) is a redistribution of income
in the market system. These payments are considered
to be exhaustive because they do not directly absorb
resources or create output. Examples of certain
transfer payments include welfare (financial aid),
social security, and government making subsidies
for certain businesses (firms). Government debt is
the debt owed by a central government. In the budget,
it is listed among the transfer payments by the
government.


(SSC Section Officer (Audit)
Exam. 05.06.2005)
21. Which of the following taxes is
such which does not cause rise
in price ?
(1) Import duty (2) Income tax
(3) Octoroi (4) Sales tax
Answer:
21. (2) The government of India imposes an income tax
on taxable income of individuals, Hindu Undivided
Families (HUFs), companies, firms, co-operative
societies and trusts (identified as body of individuals
and association of persons) and any other artificialECONOMICS
SGAE–631
person. Levy of tax is separate on each of the
persons. The levy is governed by the Indian Income
Tax Act, 1961. It does not lead to increase in price
as it is dependent of income of individuals.


(SSC Section Officer (Commercial
Audit) Exam. 25.09.2005)
22. Who among the following has
suggested tax on expenditure?
(1) Dalton
(2) Kaldor
(3) Musgrave
(4) Gautam Mathur
Answer:
22. (2) Nicholas Kaldor’s seminal work, titled ‘An
Expenditure Tax,’ was brought out in 1955. Kaldor
asked to levy a tax on a person’s expenditure
(consumption), instead of on his income. When
expenditure is made the basis of taxation, the
problems created by the non-comparability of various
types of accruals of wealth resolve themselves. This
was his major argument in favour of an expenditure
tax.


(SSC Tax Assistant (Income Tax &
Central Excise) Exam. 11.12.2005)
23. Excise duty on a commodity is
payable with reference to its
(1) production
(2) production and sale
(3) production and transportations
(4) production, transportation
and sale
Answer:
23. (1) Excise duty is a type of tax charged on goods
produced within the country. In India, an excise tax
is levied on the manufacturer of goods when those
goods leave the place of manufacturer. Formerly called
the Central Excise duty, this tax is now known as
the Central Value Added Tax (CENVAT).


(SSC CPO Sub-Inspector
Exam. 03.09.2006)
24. Which of the following is not
viewed as national debt ?
(1) Life Insurance Policies
(2) Long-term Government
Bonds
(3) National Savings Certificates
(4) Provident Fund
Answer:
24. (1) Government debt (also known as public debt,
national debt) is the debt owed by a central
government. Government debt is one method of
financing government operations, but it is not the
only method. Governments can also create money to
monetize their debts, thereby removing the need to
pay interest. But this practice simply reduces
government interest costs rather than truly canceling
government debt. Governments usually borrow by
issuing securities, government bonds and bills. Less
creditworthy countries sometimes borrow directly
from a supranational organization (e.g. the World Bank)
or international financial institutions. Life insurance
is a contract that pledges payment of an amount to
the person assured (or his nominee) on the happening
of the event insured against.


(SSC CPO Sub-Inspector
Exam. 03.09.2006)
25. What is Value Added Tax (VAT) ?
(1) A simple, transparent, easy
to pay tax imposed on consumers
(2) A new initiative taken by the
Government to increase the
tax-burden of high income
groups
(3) A single tax that replaces
State taxes like, surcharge,
turnover tax, etc.
(4) A new tax to be imposed on
the producers of capital goods
Answer:
25. (3) A value added tax (VAT) is a form of consumption
tax. A VAT is like a sales tax in that ultimately only
the end consumer is taxed. It differs from the sales
tax in that, with the latter, the tax is collected and
remitted to the government only once, at the point of
purchase by the end consumer. VAT comes under
the single tax system based primarily or exclusively
on one tax, typically chosen for its special properties.
Most of the Indian States have replaced Sales tax
with Value Added Tax (VAT) from 1 April, 2005. VAT
is imposed on goods only and not services and it has
replaced sales tax.


(SSC Tax Assistant (Income Tax &
Central Excise Exam. 12.11.2006)
26. What is referred to as ‘Depository Services’ ?
(1) A new scheme of fixed deposits
(2) A method for regulating
stock exchanges
(3) An agency for safe-keeping
of securities
(4) An advisory service to investors
Answer:
26. (3) It is a service offered by a securities depository
under which the depository maintains book accounts
recording the ownership of securities held on behalf
of the depository’s participants, for eligible securities.


(SSC Tax Assistant (Income Tax &
Central Excise Exam. 12.11.2006)
27. The ‘Interest Rate Policy’ is a
component of
(1) Fiscal Policy
(2) Monetary Policy
(3) Trade Policy
(4) Direct Control
Answer:
27. (2) Monetary policy is the process by which the
monetary authority of a country controls the supply
of money, often targeting a rate of interest for the
purpose of promoting economic growth and stability.
The official goals usually include relatively stable
prices and low unemployment. The contraction of
the monetary supply can be achieved indirectly by
increasing the nominal interest rates. Monetary
authorities in different nations have differing levels
of control of economy-wide interest rates.


(SSC Section Officer (Commercial
Audit Exam. 26.11.2006
(Second Sitting)
28. A mixed economy works primarily through the
(1) market mechanism
(2) central allocative machinery
(3) market mechanism regulated by Government policy
(4) market mechanism guided
by Government participation and planning
Answer:
28. (4) Mixed economy is an economic system in which
both the state and private sector direct the economy,
reflecting characteristics of both market economies
and planned economies. The basic idea of the mixed
economy is that the means of production are mainly
under private ownership; that markets remain the
dominant form of economic coordination; and that
profit-seeking enterprises and the accumulation of
capital remain the fundamental driving force behind
economic activity. However, unlike a free-market
economy, the government would wield considerable
indirect influence over the economy through fiscal
and monetary policies designed to counteract
economic downturns and capitalism’s tendency
toward financial crises and unemployment, along with
playing a role in interventions that promote social
welfare.


(SSC Section Officer (Commercial
Audit Exam. 26.11.2006
(Second Sitting)
29. When a large number of investors in a country transfer investments elsewhere because
of disturbed economic conditions, it is called
(1) Transfer of Capital
(2) Escape of Capital
(3) Outflow of Capital
(4) Flight of Capital
Answer:
29. (4) Flight of capital refers to the movement of money
from one investment to another in search of greater
stability or increased returns. Sometimes, it
specifically refers to the movement of money from
investments in one country to another in order to
avoid country-specific risk (such as high inflation or
political turmoil) or in search of higher returns. Capital
flight is seen most commonly in massive foreign capital
outflows from a specific country, often at times of
currency instability.


(SSC Section Officer (Commercial
Audit Exam. 26.11.2006
(Second Sitting)
30. ‘Golden Handshake Scheme’ is
associated with
(1) inviting foreign companies
(2) private investment in public
enterprises
(3) establishing joint enterprises
(4) voluntary retirement
Answer:
30. (4) The voluntary retirement scheme (VRS) is the most
humane technique to provide overall reduction in the
existing strength of the employees. It is a technique
used by companies for trimming the workforce
employed in the industrial unit. It is also known as
‘Golden Handshake’ as it is the golden route to
retrenchment.


(SSC Section Officer (Commercial
Audit Exam. 26.11.2006
(Second Sitting)
31. Industrial exit policy means
(1) forcing foreign companies
to leave India
(2) forcing business units to
move out of congested localities
(3) allowing manufacturers to
shift their line of products
(4) allowing business units to
close down
Answer:
31. (4) The term ‘exit’ is the obverse of the term ‘entry’
into industry. It refers to the right or ability of an
industrial unit to withdraw from or leave an industry or in other words to close down. The proposal to
introduce an exit policy was first mooted in 1991
when it was felt that without labor market flexibility,
efficient industrialization would be difficult to achieve.
The need for such a policy arises as a result of modernization, technology upgradation, restructuring as
well as closure of industrial units. Such a policy will
allow employers to shift workers from one unit to
another and also retrench excess labor.


(SSC Section Officer (Commercial
Audit Exam. 26.11.2006
(Second Sitting)
32. Capital formation in an economy depends on
(1) Total Income
(2) Total demand
(3) Total savings
(4) Total production
Answer:
32. (3) Capital formation refers to capital accumulation,
referring to the total “stock of capital” that has been
formed, or to the growth of this total capital stock. It
also refers to a measure of the net additions to the
(physical) capital stock of a country (or an economic
sector) in an accounting interval, or, a measure of
the amount by which the total physical capital stock
increased during an accounting period. Total capital
formation” in national accounting equals net fixed
capital investment, plus the increase in the value of
inventories held, plus (net) lending to foreign
countries, during an accounting period (a year or a
quarter). Capital is said to be “formed” when savings
are utilized for investment purposes, often investment
in production.


(SSC Section Officer (Audit)
Exam. 10.12.2006)
33. If the tax rate increases with
the higher level of income, it
shall be called
(1) Proportional tax
(2) Progressive tax
(3) Lump sum tax
(4) Regressive tax
Answer:
33. (2) A progressive tax is a tax by which the tax rate
increases as the taxable base amount increases.”
Progressive” describes a distribution effect on income
or expenditure, referring to the way the rate
progresses from low to high, where the average tax
rate is less than the marginal tax rate. It can be
applied to individual taxes or to a tax system as a
whole; a year, multi-year, or lifetime. Progressive taxes
attempt to reduce the tax incidence of people with a
lower ability-to-pay, as they shift the incidence
increasingly to those with a higher ability-to-pay.


(SSC Section Officer (Audit)
Exam. 10.12.2006)
34. New capital issue is placed in
(1) Secondary market
(2) Grey market
(3) Primary market
(4) Black market
Answer:
34. (3) The primary market is that part of the capital
markets that deals with the issuance of new securities.
Companies, governments or public sector institutions
can obtain funding through the sale of a new stock or
bond issue. This is the market for new long term equity
capital. The primary market is the market where the
securities are sold for the first time. Therefore it is
also called the new issue market (NIM).


(SSC Section Officer (Audit)
Exam. 10.12.2006)
35. Which of the following is the
classification of Industries on
the basis of raw-materials ?
(1) Small Scale – Large scale
(2) Primary and Secondary
(3) Basic and Consumer
(4) Agro-based and Mineral
based
Answer:
35. (4) Industries are classified on the bases of source of
raw material. There are two types of industries agro
based and mineral based industries. Agro based
industries are the one that produce jute, cotton, silk,
tea, coffee, rubber etc. Mineral based industries are
iron and steel, cement, aluminum, machine tools,
and petrochemicals producing industries.


(SSC Section Officer (Audit)
Exam. 10.12.2006)
36. Which one of the following
items is not included in the current account of India’s Balance
of Payments ?
(1) Short-term commercial borrowings
(2) Non-monetary gold movements
(3) Investment income
(4) Transfer payments
Answer:
36. (2) Balance of payments (BoP) accounts are an
accounting record of all monetary transactions
between a country and the rest of the world. These
transactions include payments for the country’s
exports and imports of goods, services, financial
capital, and financial transfers. The two principal
parts of the BOP accounts are the current account
and the capital account. The current account shows
the net amount a country is earning if it is in surplus,
or spending if it is in deficit. It is the sum of the
balance of trade (net earnings on exports minus
payments for imports), factor income (earnings on
foreign investments minus payments made to foreign
investors) and cash transfers. Some of the
components of the current account of BOP include
investment income; borrowing entities in respect of
their external commercial borrowing; secondary
income account (transfer payments); primary income
account (factor income such as from loans and
investments), etc.


(SSC Combined Graduate Level
Prelim Exam. 04.02.2007
(Frist Sitting)
37. In India, disguised unemployment is generally observed in
(1) the Agricultural sector
(2) the Factory sector
(3) the Service sector
(4) All these sectors
Answer:
37. (1) As the word suggests, disguised unemployment
refers to a situation when a person is apparently
employed, but in effect unemployed. It is a
phenomenon of concealed unemploy-ment, not visible
to the open eyes. Here it is not possible to identify as
to who are unemployed, as all “appear to be working.”
Disguised unemployment is especially seen in the
field of agriculture. Most of the people are observed
to be engaged in agriculture; however, in reality a
sufficient number of them are unemployed. Their
contribution regarding production is negligible.


(SSC Section Officer (Commercial
Audit) Exam. 30.09.2007
(Second Sitting)ECONOMICS
SGAE–583
38. Excise duty on a commodity is
payable with reference to its
(1) production
(2) production and sale
(3) production and transportation
(4) production, transportation
and sale
Answer:
38. (1) An excise or excise tax (sometimes called a duty
of excise special tax) is an inland tax on the sale, or
production for sale, of specific goods or a tax on a
good produced for sale, or sold, within a country or
licenses for specific activities. Excises are
distinguished from customs duties, which are taxes
on importation. Excises are inland taxes, whereas
customs duties are border taxes.


(SSC Section Officer (Commercial
Audit) Exam. 30.09.2007
(Second Sitting)
39. Which of the following taxes is
not collected by the Central
Government ?
(1) Income tax
(2) Customs duty
(3) Professional tax
(4) Excise duty
Answer:
39. (3) A professional tax, also known as an occupation
tax or a professional privilege tax, is a tax that a
professional must pay to receive the right to practice
a professional service. Many state and local
governments collect professional tax, and a
professional who has clients in more than one state
may owe professional taxes in several states.


(SSC Tax Assistant (Income Tax &
Central Excise) Exam. 25.11.2007)
40. The permission given to a bank
customer to draw cheques in
excess of his current account
balance is called
(1) a personal loan
(2) an ordinary loan
(3) discounting a bill of exchange
(4) an overdraft
Answer:
40. (4) Overdrafts is an extension of credit from a lending
institution when an account reaches zero. An
overdraft allows the individual to continue withdrawing
money even if the account has no funds in it. Basically
the bank allows people to borrow a set amount of
money. An overdraft occurs when money is
withdrawn from a bank account and the available
balance goes below zero. In this situation the account
is said to be “overdrawn.”


(SSC Tax Assistant (Income Tax &
Central Excise) Exam. 25.11.2007)
41. Which of the following is not
considered as National Debt ?
(1) National Savings Certificates
(2) Long-term Government
Bonds
(3) Insurance Policies
(4) Provident Fund
Answer:
41. (3) Government debt is the debt owed by a central
government. Governments usually borrow by issuing
securities, government bonds and bills. Government
Bonds are often issued via auctions at Stock
Exchanges. There are two main depository types:
Book-Entry and Certificate. Insurance policies do not
come under government debt. In insurance, the
insurance policy is a contract (generally a standard
form contract) between the insurer and the insured,
known as the policyholder, which determines the
claims which the insurer is legally required to pay.


(SSC Combined Graduate Level
Prelim Exam. 27.07.2008
(Second Sitting)
42. Disinvestements is
(1) offloading of shares of privates companies to government
(2) offloading of government
shares to private companies
(3) increase in investment
(4) closing down of business
concerns
Answer:
42. (2) Disinvestment is a process where Government
sells its equity holding to private sectors. In other
ways it is a privatization process where private parties
are given shareholding in Government undertakings
either wholly or partially.


(SSC CPO Sub-Inspector
Exam. 09.11.2008)
43. A short-term government security paper is called
(1) Share
(2) Debenture
(3) Mutual fund
(4) Treasury bill
Answer:
43. (4) Treasury bills are instrument of short-term
borrowing by the Government of India, issued as
promissory notes under discount. The interest
received on them is the discount which is the
difference between the price at which they are issued
and their redemption value. They have assured yield
and negligible risk of default. They are thus useful in
managing short-term liquidity. At present, the
Government of India issues three types of treasury
bills through auctions, namely, 91-day, 182-day and
364-day. There are no treasury bills issued by State
Governments.


(SSC Combined Graduate Level
Tier-I Exam. 16.05.2010
(First Sitting)
44. The existence of a parallel economy or Black Money
(1) makes the economy more
competitive
(2) makes the monetary policies less effective
(3) ensures a better distribution of income and wealth
(4) ensures increasing productive investment
Answer:
44. (2) The existence of black money is injurious not just
for tax revenues. It distorts the systematic resource
allocation process and upsets the accuracy of
economic forecasts. Inflation is both a cause as well
as a consequence of the black money in our economy.
Black money results in the social injustice and fallacy
in the economy. The rich gets richer and the poor
gets poorer. So the existence of black money erodes
the very rationale of growth behind monetary policies.


(SSC SAS Exam. 26.06.2010
(Paper-1)
45. In the context of the stock market, IPO stands for
(1) Immediate Payment Order
(2) Internal Policy Obligation
(3) Initial Public Offer
(4) International Payment Obligation
Answer:
45. (3) An initial public offering (IPO) or stock market
launch is a type of public offering where shares of
stock in a company are sold to the general public, on
a securities exchange, for the first time. Through
this process, a private company transforms into a
public company. Initial public offerings are used by
companies to raise expansion capital, to possibly
monetize the investments of early private investors,
and to become publicly traded enterprises. A company
selling shares is never required to repay the capital
to its public investors. After the IPO, when shares
trade freely in the open market, money passes
between public investors.


(SSC (South Zone) Investigator
Exam. 12.09.2010)
46. Disinvestment in Public Sector
is called
(1) Liberalisation
(2) Globalisation
(3) Industrialisation
(4) Privatisation
Answer:
46. (4) Privatization is the process of transferring
ownership of a business, enterprise, agency, public
service or public property from the public sector (a
government) to the private sector, either to a business
that operates for a profit or to a non-profit
organization. The term can also mean government
outsourcing of services or functions to private firms,
e.g. revenue collection, law enforcement, and prison
management. There are four main methods of
privatization: (a) Share issue privatization (SIP) - selling
shares on the stock market; (b) Asset sale
privatization - selling an entire organization (or part
of it) to a strategic investor, usually by auction or by
using the Treuhand model; (c) Voucher privatization
- distributing shares of ownership to all citizens,
usually for free or at a very low price; and (d)
Privatization from below - Start-up of new private
businesses in formerly socialist countries.


(SSC Combined Graduate Level
Tier-I Exam. 19.06.2011
(First Sitting)
47. The government set up a committee headed by the Chairman,
Central Board of Direct Taxes
some time back to go into –
(1) codification of tax laws
(2) the entire structure of tax
laws including the question
of imposition of bank tax
(3) the concerns of the foreign
investors in India with regard to taxation matters
(4) aspects of generation of
black money, its transfer
abroad and bringing back
such money into India’s legitimate financial system
Answer:
47. (4) The Central Board of Direct Taxes (CBDT) panel
on black money recently suggested enactment of new
laws, strengthening of existing legislation and
introduction of deterrent penalties for tax offences
to deal with the menace. In its 66-page report on
measures to tackle black money in India and abroad,
the CBDT committee also recommended steps to
prevent generation of illicit funds through transactions
in property, bullion and equity market. Besides, the
panel, headed by former CBDT Chairman Laxman
Das, made a case for strengthening laws relating to
investments by FIIs, Participatory Notes (PNs) and
routing of funds from Mauritius.


(SSC CPO(SI, ASI & Intelligence
Officer) Exam. 28.08.2011 (Paper-1)
48. What is dual pricing?
(1) Wholesale price and Retail
pricing
(2) Pricing by agents and
Pricing by retaliers
(3) Price fixed by Government
and Price in open market
(4) Daily prices and Weekly
prices
Answer:
48. (3) Dual pricing is the practice of setting prices at
different levels depending on the currency used to
make the purchase. It may be used to accomplish a
variety of goals, such as to gain entry into a foreign
market by offering unusually low prices to buyers
using the foreign currency, or as a method of price
discrimination. In the context of commerce, however,
dual pricing refers to the sale of the same product at
different prices, depending on the market. This is
also known as two-tier pricing and is common in many
developing nations.


(SSC Combined Matric Level (PRE)
Exam. 24.10.1999 (IInd Sitting)
49. A mixed economy refers to an
economic system where
(1) The economy functions with
foreign collaboration
(2) Only the private sector
operates under government
control
(3) Both the government and
the private sectors operate
sectors operate simultaneously
(4) No foreign investment is
allowed
Answer:
49. (3) Mixed economy is an economic system in which
both the state and private sector direct the economy,
reflecting characteristics of both market economies
and planned economies. The basic idea of the mixed
economy is that the means of production are mainly
under private ownership; that markets remain the
dominant form of economic coordination; and that
the government wields indirect influence over the
economy through fiscal and monetary policies.


(SSC Combined Matric Level (PRE)
Exam. 21.05.2000 (Ist Sitting)
(Riapur, Madhya Pradesh)
50. A Black Market is a situation
wherein
(1) Goods are loaded by the
producers
(2) Goods are sold secretly
(3) Goods are sold at prices
higher than what is fixed by
the Government
(4) Goods are made available
(sold) only after there is a
rise in prices
Answer:
50. (2) Black market is the market in which illegal goods
are traded. Goods acquired illegally take one of two
price levels: (i) they may be cheaper than legal market
prices as the supplier does not have to pay for
production costs or taxes; or (ii) they may be more
expensive than legal market prices as the product is
difficult to acquire or produce, dangerous to handle
or not easily available legally. Black-market
transactions typically occur as a way for participants
to avoid government price controls or taxes,
conducting transactions 'under the table.' So the most
defining feature of black markets is that they have to
be carried out secretly as they are illegal.


Post a Comment

0 Comments