Exercise 2

Question 1 :

Our financial system has provided for the transfer of resources from the centre to the states; the important means of resource transfer are


A). tax sharing
B). grant-in-aids
C). loans
D). All the above
Answer : Option D

Question 2 :

Debenture holders of a company are its


A). shareholders
B). creditors
C). debtors
D). directors
Answer : Option B

Question 3 :

Excise duty is a tax levied on the


A). import of goods
B). export of goods
C). production of goods
D). sale of goods
Answer : Option C

Explanation :

What is Excise Duty? Is it collected by the State Government or the Central Government? How is it different from Sales Tax?

Excise duty is a tax on manufacture or production of goods. Excise duty on alcohol, alcoholic preparations, and narcotic substances is collected by the State Government and is called "State Excise" duty. The Excise duty on rest of goods is called "Central Excise" duty and is collected in terms of Section 3 of the Central Excise Act, 1944.

Sales Tax is different from the Excise duty as former is a tax on the act of sale while the latter is a tax on the act of manufacture or production of goods.


Question 4 :

In pursuance with the recommendations of Narsimhan Committee, the RBI has framed new guidelines


A). to govern entry of new private sector banks to make the banking sector more competitive
B). to reduce the freedom given to banks to rationalize their existing branch network
C). to setup more foreign exchange banks
D). to lend more easily for industrial development
Answer : Option A

Question 5 :

Which of the following is the first Indian private company to sign an accord with Government of Myanmar for oil exploration in two offshore blocks in that country?


A). Reliance Energy
B). Essar Oil
C). GAIL
D). ONGC
Answer : Option B

Question 6 :

Non Tax revenues can be increased by improving the working of the


A). State Road Transport Corporations
B). electricity boards
C). commercial irrigation projects
D). All of the above
Answer : Option C

Question 7 :

Which of the following is not viewed as a national debt?


A). Provident Fund
B). Life Insurance Policies
C). National Saving Certificate
D). Long-term Government Bonds
Answer : Option C

Question 8 :

The condition of indirect taxes in the country's revenue is approximately


A). 70 percent
B). 75 percent
C). 80 percent
D). 86 percent
Answer : Option D

Question 9 :

Deficit financing means that the government borrows money from the


A). RBI
B). local bodies
C). big businessmen
D). IMF
Answer : Option A

Question 10 :

Revenue of the state governments are raised from the following sources, except


A). entertainment tax
B). expenditure tax
C). agricultural income tax
D). land revenue
Answer : Option C

Question 11 :

Since the inception of the co-operative movement, rural credits has been


A). institutionalized
B). rationalized
C). cheapened
D). All of the above
Answer : Option D

Question 12 :

If an economy is equilibrium at the point where plans to save and to invest are equal, then government expenditure must be


A). zero
B). equal to government income
C). larger than government income
D). negative
Answer : Option B

Question 13 :

The co-operative credit societies have a


A). two-tier structure
B). three-tier structure
C). four-tier structure
D). five-tier structure
Answer : Option B

Question 14 :

Regional rural banks

have limited area of operation
have free access to liberal refinance facilities from NABARD
are required to lend only to weaker sections


A). I, III
B). II, III
C). I, II, III
D). I, II
Answer : Option D

Question 15 :

The Board of Industrial and Financial Reconstruction (BIFR) came into existence in


A). 1984
B). 1986
C). 1987
D). 1989
Answer : Option C

Question 16 :

The current price index (base 1960) is nearly 330. This means that


A). all items cost 3-3 times more than what they did in 1960
B). the prices of certain selected items have gone up to 3-3 times
C). weighted means of prices of certain item has increased 3-3 times
D). gold price has gone up 3-3 times
Answer : Option C

Question 17 :

Notes on which denomination has the portrait of Mahatma Gandhi printed on them?


A). 1000 rupee
B). 500 rupee
C). 100 rupee
D). All of the above
Answer : Option D

Question 18 :

Devaluation of currency will be more beneficial if


A). prices of domestic goods remain constant
B). prices of exports remain constant
C). prices of imports remains constant
D). prices of exports rise proportionately
Answer : Option B

Question 19 :

Of the gross tax revenue of the Union Government the indirect taxes account for nearly


A). 70 per cent
B). 75 percent
C). 65 percent
D). 60 percent
Answer : Option C

Question 20 :

The banks are required to maintain a certain ratio between their cash in the hand and totals assets. This is called


A). Statutory Bank Ratio (SBR)
B). Statutory Liquid Ratio (SLR)
C). Central Bank Reserve (CBR)
D). Central Liquid Reserve (CLR)
Answer : Option B

Question 21 :

Reserve Bank of India was nationalized in the year


A). 1935
B). 1945
C). 1949
D). 1969
Answer : Option C

Explanation :

RBI established in 1935 and nationalized in 1949.


Question 22 :

In India, rural incomes are generally lower than the urban incomes, which of the following reasons account for this?

A large number of farmers are illiterate and know little about scientific agriculture
Prices of primary products are lower than those of manufactured products
Investment in agriculture has been low when compared to investment in industry


A). I, II, III
B). I, II
C). I, III
D). II, III
Answer : Option A

Question 23 :

National Agricultural Insurance Scheme replacing Comprehensive Crop Insurance Scheme was introduced in the year


A). 1997
B). 1998
C). 1999
D). 2000
Answer : Option C

Question 24 :

If the fiscal deficit of the Union Government is Rs. 75,000 crores relending to State is Rs. 25,000 crores, interest payments are Rs. 25,000 crores, what is the amount of the primary deficit?


A). Rs. 50,000 crores
B). Rs. 25,000 crores
C). Rs. 1,00,000 crores
D). Rs. 1,25,000 crores
Answer : Option A

Question 25 :

Fiscal deficit in the Union Budget means


A). the difference between current expenditure and current revenue
B). net increase in Union Governments 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 monetized deficit and budgetary deficit
Answer : Option C