Interest paid by the government on the loans raised is called
(a) Debt Servicing
(b) Deficit Financing
(c) Discounted Budgeting
(d) Bridge-loan
Solution: (a)
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.”
The best Index of Economic Development is provided by:
(a) Growth in Percapita Real Income from year to year.
(b) Growth in National Income at Current Prices.
(c) Growth in the savings ratio.
(d) Improvement in the Balance of Payments Position
Solution: (a)
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.
Indirect taxes by nature are
(a) degressive
(b) regressive
(c) progressive
(d) proportional
Solution: (b)
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.
Which one of the following is the most appropriate reason for Inequalities in Income?
(a) Racial factors
(b) Lack of opportunities
(c) Inheritance from Family Environment
(d) Differences in Ability
Solution: (b)
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.
Which one of the following is a direct tax?
(a) Sales Tax
(b) Excise Tax
(c) Wealth Tax
(d) Entertainment Tax
Solution: (c)
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.
The New Economic Policy was introduced by:
(a) Lenin
(b) Stalin
(c) Kerensky
(d) Khrushchev
Solution: (a)
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.
‘Gold’ is mainly related to
(a) Local market
(b) National market
(c) International market
(d) Regional market
Solution: (c)
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.
Forced Savings refer to
(a) Reduction of consumption consequent to a rise in prices
(b) Taxes on individual income and wealth
(c) Compulsory deposits imposed on income taxpayers
(d) Provident fund contribution of private sector employees
Solution: (a)
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.
Taxes on professions can be levied by:
(a) State government only
(b) both by state and union government
(c) by panchayats only
(d) Union government only
Solution: (a)
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.
The non-expenditure costs which arise when the producing firm itself owns and supplies certain factors of production are
(a) Explicit costs
(b) Original costs
(c) Implicit costs
(d) Replacement costs
Solution: (c)
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.
3 Comments
Comments are closed.