Economics GK Quiz-24

51. The ‘Canons of Taxation’ were
propounded by
(1) Edwin Canon
(2) Adam Smith
(3) J.M. Keynes
(4) Dalton
Answer:
51. (2) Canons of Taxation were first originally laid down
by economist Adam Smith in his famous book "The
Wealth of Nations". In this book, Adam smith only
gave four canons of taxation: (i) canon of equity; (ii)
canon of certainty; (iii) canon of convenience; and (iv)
canon of economy.


(SSC Combined Matric Level (PRE)
Exam. 13.05.2001 (Ist Sitting)
52. Beyond a certain point deficit
financing will certainly lead to
(1) inflation
(2) deflation
(3) recession
(4) economic stagnation
Answer:
52. (1) Deficit financing is a practice in which a
government spends more money than it receives as
revenue, the difference being made up by borrowing
or minting new funds. Some economists are of the
view that it leads to inflation as governments pay off
debts by printing fiat money, increasing the money
supply and the purchasing power of the people which
increases the aggregate demand.


(SSC Combined Matric Level (PRE)
Exam. 13.05.2001 (Ist Sitting)
53. In public budgets, zero-base
budgeting was first introduced in
(1) USA (2) UK
(3) France (4) Sweden
Answer:
53. (1) Zero-based budgeting is an approach to planning
and decision-making which reverses the working
process of traditional budgeting. This technique of
budgeting was developed by Peter Phyrr in the United
States and was first implemented at Texas
Instruments in the 1960s. In 1973, President Jimmy
Carter contracted with Phyrr to implement a ZBB
system for the State of Georgia executive budget
process.


(SSC Combined Matric Level (PRE)
Exam. 13.05.2001 (Ist Sitting)
54. The sale proceeds of Government Bonds come under the
budget head of
(1) Revenue Receipts
(2) Current Expenditure
(3) Capital Outlay
(4) Capital Receipts
Answer:
54. (4) Capital receipts are the funds received into the
businesses that are not part of the operating activities
of the establishment. Capital receipts primarily include
external assistance, market loans, small savings,
principal investment in bonds, and Government
provident funds. A capital receipt is a receipt which
is derived from sale or purchase of capital assets
like plant and machinery, furniture, investment (long
term) etc., which shall not be occurring all the time.


(SSC Combined Matric Level
(PRE) Exam. 27.05.2001
(IInd Sitting) (East Zone)ECONOMICS
SGAE–584
55. The tax levied on gross sales
revenue from business transactions is called
(1) Turnover Tax
(2) Sales Tax
(3) Capital Gains Tax
(4) Corporation Tax
Answer:
55. (1) A turnover tax is similar to a sales tax or a VAT,
with the difference that it taxes intermediate and
possibly capital goods. It is charged on gross sales
revenue from business transactions. Unlike a sales
tax, which is levied only on gross value at the point
of retail sale, a turnover tax is levied on all
intermediate transactions between businesses leading
to and including the final sale.


(SSC Combined Matric Level (PRE)
Exam. 05.05.2002 (Ist Sitting)
(Eastern Zone, Guwahati)
56. Ad Valorem tax is levied
(1) according to value added
by the Government.
(2) according to value addition
to a commodity
(3) according to value given
by producers
(4) according to value added
by the finance ministry
Answer:
56. (3) An ad valorem tax (Latin for "according to value")
is a tax based on the value of real estate or personal
property. It is more common than a specific tax, a
tax based on the quantity of an item, such as cents
per kilogram, regardless of price. It is levied on the
basis of value given by producers. So sometimes,
the primary difficulty with such taxation, especially
in the case of tariffs, is in establishing a satisfactory
value figure.


(SSC Combined Matric Level (PRE)
Exam. 05.05.2002 (IInd Sitting)
(North Zone, Delhi)
57. Paraellel economy emerges due
to
(1) Tax Avoidance
(2) Tax Evasion
(3) Tax Compliance
(4) Tax Estimation
Answer:
57. (2) Parallel economy (black economy) indicates the
functioning of an unsanctioned sector in the economy
whose objectives run parallel with the social
objectives. Major contributory factor to such an
economy is black money which is any money that a
person or an organization acquires as by a means
that involves tax evasion. It is that income from illegal
activities that is not reported to the government for
tax purposes.


(SSC Combined Matric Level (PRE)
Exam. 12.05.2002 (IInd Sitting)
58. Under-writting refers to
(1) under estimation
(2) under selling
(3) winding up the business
(4) an act of insuring risk
Answer:
58. (4) The word "underwriter" is said to have come from
the practice of having each risk-taker write his or
her name under the total amount of risk that he or
she was willing to accept at a specified premium. In
a way, this is still true today, as new issues are usually
brought to market by an underwriting syndicate in
which each firm takes the responsibility (and risk) of
selling its specific allotment.


(SSC Combined Matric Level (PRE)
Exam. 12.05.2002 (IInd Sitting)
59. The incidence of Tax refers to
(1) Who pays the Tax ?
(2) Who bears the burden of
Tax ?
(3) How Taxes can be shifted ?
(4) Who transfers the Tax burden ?
Answer:
59. (2) 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.


(SSC Combined Matric Level (PRE)
Exam. 16.06.2002 (Re-Exam)
60. Core Industries are
(1) Basic industries
(2) Consumer goods industries
(3) Capital goods industries
(4) Government industries
Answer:
60. (1) Core Industries are those necessary industries in
an economy that are necessary for industrialization
of a country. Such industries include Machine tools,
chemicals, power, steel, etc. The Planning
Commission of India has defined them as industries
"involving significant investments or foreign
exchange." The Commission indicated that the core
sector should include all the basic, strategic and
critical industries, and no single criterion such as
that of foreign exchange requirements should govern
the definition of the core sector.


(SSC Combined Matric Level
(PRE) Exam. 30.07.2006
(Ist Sitting) (East Zone)
61. Interest paid by the government
on the loans raised is called
(1) Debt Servicing
(2) Deficit Financing
(3) Discounted Budgeting
(4) Bridge-loan
Answer:
61. (1) Debt service is the amount of money required to
make payments on the principal and interest on
outstanding loans, the interest on bonds, or the
principal of maturing bonds. An individual or company
unable to make such payments is said to be "unable
to service one's debt."


(SSC Combined Matric Level (PRE)
Exam. 30.07.2006 (IInd Sitting)
(Central Zone)
62. In an economy, the sectors are
classified into public and private on the basis of
(1) employment conditions
(2) nature of economic activities
(3) ownership of enterprises
(4) use of raw materials
Answer:
62. (3) The classical breakdown of all economic sectors
is: primary, secondary and tertiary. However, on the
basis of ownership, the sectors are: business sector,
private sector (privately run businesses), public
sector (state sector) and voluntary sector.


(SSC Data Entry Operator
Exam. 02.08.2009)
63. The best Index of Economic Development is provided by:
(1) Growth in Percapita Real
Income from year to year.
(2) Growth in National Income
at Current Prices.
(3) Growth in savings ratio.
(4) Improvement in the Balance
of Payments Position.
Answer:
63. (1) Per capita Gross National Product (GNP) is the
best index of development. It can be derived by
dividing the GNP of a country with its population.
Higher the level of per capita income, higher is the
economic development. The World Bank, in its world
development report 1998, classified the countries in
the world on the bases of per capita GNP.


(SSC Stenographer (Grade 'C' & 'D')
Exam. Held on : 26.09.2010)
64. Which one of the following is
nota ‘canon of taxation’ according to Adam Smith ?
(1) Canon of certainty
(2) Canon of simplicity
(3) Canon of convenience
(4) Canon of economy
Answer:
64. (2) In this book, titled ‘The Wealth of Nations, ‘Adam
smith only gave four canons of taxation: (i) canon of
equity; (ii) canon of certainty; (iii) canon of
convenience; and (iv) canon of economy.


(SSC Higher Secondary Level
Data Entry Operator & LDC
Exam. 28.11.2010 (IInd Sitting)
65. Indirect taxes by nature are
(1) degressive (2) regressive
(3) progressive (4) proportional
Answer:
65. (2) An indirect tax is one in which the burden can be
shifted to others. The tax payer is not the tax bearer.
The impact and incidence of indirect taxes are on
different persons. Since, most of the indirect taxes
are not progressive in nature, individuals may not
mind to pay them. In other words, indirect taxes are
generally regressive in nature. Therefore, individuals
would not be de-motivated to work and to save, which
may increase investment.


(SSC Stenographer (Grade
'C' & 'D') Exam. 09.01.2011)
66. Taxation is a tool of
(1) Monetary policy
(2) Fiscal policy
(3) Price policy
(4) Wage policy
Answer:
66. (2) 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.


(SSC (10+2) Level Data Entry
Operator & LCD Exam. 11.12.2011
(Ist Sitting (Delhi Zone)
67. Which one of the following is the
most appropriate reason for Inequalities in Income ?
(1) Racial factors
(2) Lack of opportunities
(3) Inheritance from family Environment
(4) Differences in Ability
Answer:
67. (2) Joseph E. Stiglitz, a Nobel laureate in economics,
has pointed how lack of opportunity leads to widening
of inequality. It leads to concentration of income and
wealth at the top, the hollowing out of the middle,
and increasing poverty at the bottom.


(SSC (10+2) Level Data Entry
Operator & LDC Exam. 28.10.2012
(1st Sitting)
68. Which one of the following is not
included in current revenue of
the Union Government ?
(1) Tax revenue
(2) Non-tax revenue
(3) Loans
(4) Interest payments
Answer:
68. (3) Loans are not included in the current revenue of
the Union Government.


(SSC (10+2) Level Data Entry
Operator & LDC Exam. 04.11.2012
(2nd Sitting)
69. Which one of the following is a
direct tax ?
(1) Sales Tax
(2) Excise Tax
(3) Wealth Tax
(4) Entertainment Tax
Answer:
69. (3) Direct tax is a tax levied directly on the person or
company that has to pay it. These taxes are paid
directly to the tax authority.


(SSC Multi-Tasking Staff Exam.
10.03.2013, Ist Sitting : Patna)
70. Custom duty is an instrument of
(1) Monetary Policy
(2) Foreign Trade Policy
(3) Industrial Policy
(4) Fiscal Policy
Answer:
70. (2) Custom duty is a tax on imports imposed on an
ad valorem basis, i.e, fixed in the form of a percentage
on the value of the commodity imported.


(SSC Multi-Tasking Staff Exam.
10.03.2013, Ist Sitting : Patna)
71. The New Economic Policy was introduced by:
(1) Lenin (2) Stalin
(3) Kerensky (4) Khrushchev
Answer:
71. (1) The New Economics Policy was introduced by
Vladimir Ilyich Lenin (1870-1924). He was founder
of modern communist Russia. He was the leader of
Soviet Revolution of October 1917 . He liberated the
country from the Czars and became Head of its first
Communist Government (1917-1924) . He dedicated
himself to the cause of workers’ revolution.


(SSC Multi-Tasking Staff
Exam. 10.03.2013)
72. “Functional Finance” is associated
with :
(1) Adolph Wogner
(2) Adam Smith
(3) Adams
(4) Abba ‘P’ Lerner
Answer:
72. (4) Functional finance is an economic theory proposed
by Abba P. Lerner, based on effective demand
principle and chartalism. It states that government
should finance itself to meet explicit goals, such as
taming the business cycle, achieving full employment,
ensuring growth, and low inflation.


(SSC Graduate Level Tier-I
Exam. 21.04.2013)
73. ‘Gold’ is mainly related to
(1) Local market
(2) National market
(3) International market
(4) Regional market
Answer:
73. (3) Gold is mainly related to the international market
as of all the precious metals, it is the most popular as
an investment. Gold has been used throughout history
as money and has been a relative standard for
currency equivalents specific to economic regions or
countries, until recent times. Gold price has shown a
long term correlation with the price of crude oil.


(SSC Graduate Level Tier-I
Exam. 21.04.2013)
74. Value-added means value of
(1) output at factor cost
(2) output at market prices
(3) goods and services less depreciation
(4) goods and services less cost
of intermediate goods and
services
Answer:
74. (4) Value added is an economic term to express the
difference between the value of goods and the cost of
materials or supplies that are used in producing them.
It is a measure of economic activity which eliminates
the duplication inherent in the sales value figure which
results from the use of products of some
establishments as materials or services by others. So
it is of goods and services less cost of intermediate
goods and services.


(SSC Graduate Level Tier-I
Exam. 19.05.2013)ECONOMICS
SGAE–585
75. Forced Savings refer to
(1) Reduction of consumption
consequent to a rise in prices
(2) Taxes on individual income
and wealth
(3) Compulsory deposits imposed
on income tax payers
(4) Provident fund contribution of
private sector employees
Answer:
75. (1) Forced saving is an economic situation in which
consumers spend less than their disposable income,
not because they want to save but because the goods
they seek are not available or because goods are too
expensive. In a free economy, this situation would
normally result in increase in prices and inflow of
more goods.


(SSC Graduate Level Tier-I
Exam. 19.05.2013)
76. Which of the following is an indirect tax ?
(1) Capital Gains Tax
(2) Excise Duty
(3) Wealth Tax
(4) Estate Duty
Answer:
76. (2) Some examples of indirect taxes include value
added tax, excise duty, sales tax, stamp duty and
custom duty levied on imports. These are taxes levied
by the state on expenditure and consumption, but
not on property or income.


(SSC CAPFs SI & CISF ASI
Exam. 23.06.2013)
77. Taxes on professions can be
levied by :
(1) State government only
(2) both by state and union
government
(3) by panchayats only
(4) Union government only
Answer:
77. (1) In India, the professional tax is imposed at the
state level. However, not all the states impose this
tax. Business owners, working individuals, merchants
and people carrying out various occupations comes
under the purview of this tax. Professional tax is levied
by particular Municipal Corporations.


(SSC CAPFs SI & CISF ASI
Exam. 23.06.2013)
78. A part of National Debt known
as External Debt is the amount
(1) borrowed by its citizens
from abroad
(2) lent by its citizens to foreign
governments
(3) borrowed by its government
from abroad
(4) lent by its government to foreign government
Answer:
78. (3) External debt (or foreign debt) is that part of the
total debt in a country that is owed to creditors outside
the country. The debtors can be the government,
corporations or private households. The debt includes
money owed to private commercial banks, other
governments, or international financial institutions
such as the International Monetary Fund (IMF) and
World Bank.


(SSC (10+2) Level Data Entry
Operator & LDC Exam.
10.11.2013, Ist Sitting)
79. The non-expenditure costs which
arise when the producing firm
itself owns and supplies certain
factors of production are
(1) Explicit costs
(2) Original costs
(3) Implicit costs
(4) Replacement costs
Answer:
79. (3) In economics, an implicit is the opportunity cost
equal to what a firm must give up in order to use
factors which it neither purchases nor hires. It is the
opposite of an explicit cost, which is borne directly.
In other words, an implicit cost is any cost that results
from using an asset instead of renting, selling, or
lending it. These are costs a business incurs without
actually spending money.


(SSC (10+2) Level Data Entry
Operator & LDC Exam.
10.11.2013, Ist Sitting)
80. Which of the following subjects
does not figure in the Concurrent List of our Constitution ?
(1) Stock Exchanges and futures
markets
(2) Protection of wild animals and
birds
(3) Forests
(4) Trade unions
Answer:
80. (1) The Concurrent List or List-III is a list of 47 items
given in Part XI of the Constitution of India, concerned
with relations between the Union and States. Stock
exchanges and futures markets come under the Union
List.


(SSC (10+2) Level Data Entry
Operator & LDC
Exam. 10.11.2013, IInd Sitting)
81. The theory of “Maximum Social
Advantage” in Public Finance was
given by
(1) Robbins (2) Musgrave
(3) Findley (4) Dalten
Answer:
81. (4) The 'Principle of Maximum Social Advantage' was
introduced by British economist Hugh Dalton. According to Dalton, “The best system of public finance is
that which secures the maximum social advantage
from the operations which it conducts."


(SSC CHSL (10+2) DEO & LDC
Exam. 02.11.2014, IInd Sitting)
82. Taxes are as certain as the
death, because
(1) They constitute the major
source of government revenue.
(2) Government have no other source of revenue.
(3) Most PSUs are run inefficiently.
(4) Government has its own budget constraints.
Answer:
82. (1) Benjamin Franklin’s utterance, “In this world nothing can be said to be certain, except death and taxes,” when applied in economics means that the largest amount of revenue raised by governments comes
from taxation. The proverb draws on the actual inevitability of death to highlight the difficulty in avoiding
the burden of taxes.


(SSC CHSL (10+2) DEO & LDC
Exam. 16.11.2014)
83. A tax is said to be regressive
when its burden falls
(1) less heavily on the poor than
on the rich
(2) more heavily on the poor
than on the rich
(3) equally on the poor as on the
rich
(4) None of these
Answer:
83. (2) In terms of individual income and wealth, a regressive tax imposes a greater burden on the poor
than on the rich. There is an inverse relationship
between the tax rate and the taxpayer’s ability to pay,
as measured by assets, consumption, or income.
These taxes tend to reduce the tax burden of the
well-to-do, as they shift the burden disproportionately to the needy.


(SSC CAPFs SI, CISF ASI & Delhi
Police SI Exam, 21.06.2015
IInd Sitting)
84. Mixed Economy means :
(1) Promoting both agriculture
and industries in the
economy
(2) Co-existence of public and
private sectors
(3) Co-existence of rich and poor
(4) Co-existence of small and
large industries
Answer:
84. (2) A mixed economy is variously defined as an economic system consisting of a mixture of either markets and economic planning, public ownership and
private ownership, or free markets and economic interventionism. All modern economies are mixed where
the means of production are shared between the private and public sectors.


(SSC CHSL (10+2) LDC, DEO
& PA/SA Exam, 15.11.2015
(IInd Sitting) TF No. 7203752)
85. By whom was the autonomous
investment separated from induced investment ?
(1) Schumpeter (2) Malthus
(3) Joan Robinson (4) Adam Smith
Answer:
85. (1) Under his concept of creative destruction, Schumpeter distinguished between two types of investment
that he called induced and autonomous. Induced investment arose from the discrepancy between supply and demand and autonomous investment from
resources and technology created by the entrepreneurs. He also introduced a concept of "saving up"
which is different from saving in the neoclassical
growth models. Saving up constituted the part of output that is withheld from investment and consumption.


(SSC CHSL (10+2) LDC, DEO
& PA/SA Exam, 15.11.2015
(IInd Sitting) TF No. 7203752)
86. When price of a substitute of
commodity ‘x’ falls, the demand
for ‘x’ :
(1) falls
(2) remains unchanged
(3) increases at increasing rate
(4) rises
Answer:
86. (1) Cross Price Effect refers to effect on the demand
for a given commodity due to a change in the price of
a substitute commodity. A change (increase or decrease) in the price of substitutes directly affects the
demand for a given commodity. When price of substitute goods (say, coffee) rises, demand for the given
commodity (say, tea) also rises at its same price. It
leads to a rightward shift in the demand curve of the
given commodity. With decrease in price of substitute goods (coffee), demand for the given commodity
(tea) also decreases. It shifts the demand curve of
the given commodity towards left.


(SSC CHSL (10+2) LDC, DEO
& PA/SA Exam, 15.11.2015
(IInd Sitting) TF No. 7203752)
87. VAT is imposed:
(1) Directly on Consumer
(2) On first stage of production
(3) On final stage of production
(4) On all stages between production and sale
Answer:
87. (4) Value Added Tax (VAT) is imposed on the value
added to each commodity by a firm during all stages
of production and distribution. In simple terms, it is
a fee assessed against businesses at each step of the
production and distribution process, usually whenever a product is resold or value is added to it. Valueadded taxation in India was introduced as an indirect
value added tax (VAT) into the Indian taxation system
from 1 April 2005.


(SSC CHSL (10+2) LDC, DEO
& PA/SA Exam, 06.12.2015
(Ist Sitting) TF No. 1375232)
88. The aim of Differentiated Interest Scheme was to provide concessional loans to _______.
(1) weaker section of the society
(2) Public Sector Industries
(3) Public Limited Companies
(4) big exports
Answer:
88. (1) The Differential Rate of Interest Scheme, formulated in March 1972, offers financial assistance at
concessional rate of interest @ 4% to those who intend taking up any productive activity and has been
tailored for persons whose income is very low. This
scheme is meant for:
• Persons belonging to SC/STs, Adivasis engaged in
agricultural operations and/ or allied activities;
• Persons engaged in collection of forest products, fodder and selling these in markets;
• Persons engaged in Village and Cottage Industries on
a very small scale; etc.

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