INDIAN ECONOMY MULTIPLE CHOICE QUESTIONS

1. Deficit financing increases—
(A) Rate of money inflation
(B) Rate of money deflation
(C) Rate of devaluation
(D) All of the above
Ans : (A)

2. Which is not a monetary measure to control inflation ?
(A) Soft loan policy
(B) Hard credit policy
(C) Tight the regulation of money issue
(D) To reduce the quantity of money
Ans : (A)

3. Which is the monetary measure to control inflation ?
(A) Increase in taxation
(B) Decrease in taxation
(C) Soft credit policy
(D) Hard credit policy
Ans : (D)

4. Selling of securities in the open market by the central bank creates—
(A) Inflation
(B) Deflation
(C) Both of above
(D) None of the above
Ans : (B)

5. To control inflation the central bank should do—
(A) To sell government securities and to decrease bank rate
(B) To sell government securities and to increase bank rate
(C) To purchase government securities and to increase bank rate
(D) To purchase government securities and to decrease bank rate
Ans : (B)


6. To buy a book, from the market by giving money is called—
(A) Direct Exchange
(B) Indirect Exchange
(C) Direct and Indirect exchange
(D) This is not any type of exchange
Ans : (A)

7. Which of the following is not a direct tax ?
(A) Income tax
(B) Property tax
(C) Sales tax
(D) House tax
Ans : (C)

8. Ultimate burden of tax is known as—
(A) Impact
(B) Incidence
(C) Shifting of tax
(D) None of the above
Ans : (B)

9. When elasticity of demand and elasticity of supply are equal, the burden of tax ?
(A) Lies more on buyer
(B) Lies more on seller
(C) Lies equally on buyer and seller
(D) All of the above are false
Ans : (C)

10. Which of the following economists suggested tax on expenditure ?
(A) Dalton
(B) Musgrave
(C) Kaldor
(D) Van Philips
Ans : (A)

11. If interest payment is deducted from the fiscal deficit, then the balance is—
(A) Primary deficit
(B) Budgetary deficit
(C) Revenue deficit
(D) Monetary deficit
Ans : (A)

12. Which is the characteristic of a tax ?
(A) Tax is a payment for government service
(B) Tax is a compulsory payment
(C) Tax is voluntary
(D) To get benefit for a tax is compulsory
Ans : (B)

13. Which government income is included in revenue budget ?
(A) Tax-revenue
(B) Non-tax-revenue
(C) Both of above
(D) None of the above
Ans : (C)

14. Which is included in Capital budget ?
(A) Income received from public borrowings
(B) Income received from tax-sources
(C) Income received from non-tax sources
(D) All of the above
Ans : (A)


15. Which is not included in the principles of public expenditure as developed by Findley Shirras ?
(A) Principle of Economy
(B) Principle of Sanction
(C) Principle of Elasticity
(D) Principle of Surplus
Ans : (C)

16. Which of the following is the largest significant factor of revenue expenditure of Central Government ?
(A) Defence Expenditure
(B) Subsidy
(C) Interest Payment
(D) Salary
Ans : (C)

17. In comparison to revenue deficit; the size of fiscal deficit is always—
(A) Higher
(B) Smaller
(C) Similar
(D) Uncertain
Ans : (A)

18. What is CENVAT ?
(A) Direct Tax
(B) Indirect Tax
(C) Development Planning
(D) None of the above
Ans : (B)

19. Where is Indian Diamond Institute (IDI) established ?
(A) New Delhi
(B) Mumbai
(C) Surat
(D) Jaipur
Ans : (C)

20. What is the nature of income tax in India ?
(A) Proportional
(B) Progressive
(C) Regressive
(D) None of the above
Ans : (B)

21. Which factor is not related to economic development ?
(A) Continuous process
(B) Increase in real national income
(C) Long run and continuous increase
(D) Compulsory change in economic welfare
Ans : (D)

22. The index of measuring economic development is—
(A) Increase in productive assets
(B) National income
(C) Per-capita income
(D) Any of the above
Ans : (D)

23. Process of economic development means—
(A) Economic change
(B) Social change
(C) Ethical, institutional and cultural change
(D) All of the above
Ans : (D)

24. At 2004-05 prices, the per-capita national income in India during 2009-10 was—
(A) Rs. 21005
(B) Rs. 33588
(C) Rs. 25241
(D) Rs. 20241
Ans : (B)

25. What is the main characteristic of a capitalist or free market economy ?
(A) Individuals are the owners of factors of production
(B) Profit is the main motive of carrying out various activities
(C) Consumer freedom
(D) All of the above
Ans : (D)