Which of the following is not considered National Debt?
(a) National Savings Certificates
(b) Long-term Government Bonds
(c) Insurance Policies
(d) Provident Fund
Solution: (c)
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.
A short-term government security paper is called
(a) Share
(b) Debenture
(c) Mutual fund
(d) Treasury bill
Solution: (d)
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.
In the context of the stock market, IPO stands for
(a) Immediate Payment Order
(b) Internal Policy Obligation
(c) Initial Public Offer
(d) International Payment Obligation
Solution: (c)
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.
The government set up a committee headed by the Chairman, Central Board of Direct Taxes some time back to go into –
(a) codification of tax laws
(b) the entire structure of tax laws including the question of imposition of bank tax
(c) the concerns of the foreign investors in India with regard to taxation matters
(d) aspects of the generation of black money, its transfer abroad, and bringing back such money into India’s legitimate financial system
Solution: (d)
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.
A mixed economy refers to an economic system where
(a) The economy functions with foreign collaboration
(b) Only the private sector operates under government control
(c) Both the government and the private sectors operate simultaneously
(d) No foreign investment is allowed
Solution: (c)
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.
The ‘Canons of Taxation’ were propounded by
(a) Edwin Canon
(b) Adam Smith
(c) J.M. Keynes
(d) Dalton
Solution: (b)
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.
In public budgets, zero-base budgeting was first introduced in
(a) USA
(b) UK
(c) France
(d) Sweden
Solution: (a)
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.
The tax levied on gross sales revenue from business transactions is called
(a) Turnover Tax
(b) Sales Tax
(c) Capital Gains Tax
(d) Corporation Tax
Solution: (a)
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.
Parallel economy emerges due to
(a) Tax Avoidance
(b) Tax Evasion
(c) Tax Compliance
(d) Tax Estimation
Solution: (b)
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.
The incidence of Tax refers to
(a) Who pays the Tax?
(b) Who bears the burden of Tax?
(c) How Taxes can be shifted?
(d) Who transfers the Tax burden?
Solution: (b)
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.
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