(d) according to value added by the finance ministry
Solution: (c)
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.
The sale proceeds of Government Bonds come under the budget head of
(a) Revenue Receipts
(b) Current Expenditure
(c) Capital Outlay
(d) Capital Receipts
Solution: (d)
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.
Beyond a certain point deficit financing will certainly lead to
(a) inflation
(b) deflation
(c) recession
(d) economic stagnation
Solution: (a)
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.
A Black Market is a situation wherein
(a) Goods are loaded by the producers
(b) Goods are sold secretly
(c) Goods are sold at prices higher than what is fixed by the Government
(d) Goods are made available (sold) only after there is a rise in prices
Solution: (b)
Black market is the market in which illegal goods are traded. Goods acquired illegally take one of two price levels: (i) they may be cheaper than legal market prices as the supplier does not have to pay for production costs or taxes; or (ii) they may be more expensive than legal market prices as the product is difficult to acquire or produce, dangerous to handle or not easily available legally. Black-market transactions typically occur as a way for participants to avoid government price controls or taxes, conducting transactions ‘under the table.’ So the most defining feature of black markets is that they have to be carried out secretly as they are illegal.
What is dual pricing?
(a) Wholesale price and Retail pricing
(b) Pricing by agents and Pricing by retailers
(c) Price fixed by Government and Price in the open market
(d) Daily prices and Weekly prices
Solution: (c)
Dual pricing is the practice of setting prices at different levels depending on the currency used to make the purchase. It may be used to accomplish a variety of goals, such as to gain entry into a foreign market by offering unusually low prices to buyers using the foreign currency, or as a method of price discrimination. In the context of commerce, however, dual pricing refers to the sale of the same product at different prices, depending on the market. This is also known as two-tier pricing and is common in many developing nations.
Disinvestment in Public Sector is called
(a) Liberalisation
(b) Globalisation
(c) Industrialisation
(d) Privatisation
Solution: (d)
Privatization is the process of transferring ownership of a business, enterprise, agency, public service or public property from the public sector (a government) to the private sector, either to a business that operates for a profit or to a non-profit organization. The term can also mean government outsourcing of services or functions to private firms, e.g. revenue collection, law enforcement, and prison management. There are four main methods of privatization: (a) Share issue privatization (SIP) – selling shares on the stock market; (b) Asset sale privatization – selling an entire organization (or part of it) to a strategic investor, usually by auction or by using the Treuhand model; (c) Voucher privatization – distributing shares of ownership to all citizens, usually for free or at a very low price; and (d) Privatization from below – Start-up of new private businesses in formerly socialist countries.
The existence of a parallel economy or Black Money
(a) makes the economy more competitive
(b) makes the monetary policies less effective
(c) ensures a better distribution of income and wealth
(d) ensures increasing productive investment
Solution: (b)
The existence of black money is injurious not just for tax revenues. It distorts the systematic resource allocation process and upsets the accuracy of economic forecasts. Inflation is both a cause as well as a consequence of the black money in our economy. Black money results in the social injustice and fallacy in the economy. The rich gets richer and the poor gets poorer. So the existence of black money erodes the very rationale of growth behind monetary policies.
Disinvestments are
(a) offloading of shares of privates companies to government
(b) offloading of government shares to private companies
(c) increase in investment
(d) closing down of business concerns
Solution: (b)
Disinvestment is a process where Government sells its equity holding to private sectors. In other ways it is a privatization process where private parties are given shareholding in Government undertakings either wholly or partially.
The permission given to a bank customer to draw cheques in excess of his current account balance is called
(a) a personal loan
(b) an ordinary loan
(c) discounting a bill of exchange
(d) an overdraft
Solution: (d)
Overdrafts is an extension of credit from a lending institution when an account reaches zero. An overdraft allows the individual to continue withdrawing money even if the account has no funds in it. Basically the bank allows people to borrow a set amount of money. An overdraft occurs when money is withdrawn from a bank account and the available balance goes below zero. In this situation the account is said to be “overdrawn.”
Excise duty on a commodity is payable with reference to its
(a) production
(b) production and sale
(c) production and transportation
(d) production, transportation, and sale
Solution: (a)
An excise or excise tax (sometimes called a duty of excise special tax) is an inland tax on the sale, or production for sale, of specific goods or a tax on a good produced for sale, or sold, within a country or licenses for specific activities. Excises are distinguished from customs duties, which are taxes on importation. Excises are inland taxes, whereas customs duties are border taxes.
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