Competitive Exams: Economics MCQs (Practice-Test 113 of 122)

  1. The share of direct taxes, as a percentage of GDP in the post-independence period has.

    1. remained stagnant around 2.5 percent

    2. grown from 2.5

    3. declined from about 8 percent in the early 50's to about 2.5 percent now.

    4. shown no clear trend

  2. The Central Government has to resort to substantial borrowing since the early 80's, mainly; because

    1. It had expanded its expeditious on the social sector significantly

    2. it had embarked on an ambitious space programme

    3. the revenue expenditure had systematically out stepped current revenues.

    4. the revenue expenditure had systematically out stepped capital receipts.

  3. In the Union Budget for 1993 − 94, there was an introduction of a tax of Rs. 1400 for shopkeepers and retails traders with an annual turnover of Rs. 5 lakh and below. This is an example of

    1. sales tax

    2. excise duty

    3. presumptive income tax

    4. turnover tax

  4. The government has recently stressed the importance of limiting the quantum of fiscal deficit to 5 percent of GDP. This context fiscal deficit has been defined as the

    1. difference between all receipts and expenditure both revenue and capital

    2. increase in net RBI credit to the Central government

    3. excess of total expenditure including loans net of lending over revenue receipts, grants and non-debt capital receipts

    4. Excess of revenue expenditure over revenue and capital receipts.

  5. Consider the following statements: The objective of personal income tax reform in the recent past has been to

    1. bring the ‘hard-to-tax’ groups into the tax net

    2. adopt a highly progressive a rate schedule

    3. choose moderate rates.

    4. allow as few deductions and exemptions as is possible.

    Of the above statements

    1. 1 2 and 3 are correct

    2. 2, 3 and 4 are correct

    3. 1, 2 and 4 are correct

    4. 1, 3 and 4 are correct.

    Codes:

    1. Both A and R are true and R is the correct explanation of A

    2. Both A and R are true but R is NOT a correct explanation of A

    3. A is true but R is false

    4. A is false but R is true

    • Assertion (A): Banking sector's contribution to national income is zeros.
    • Reason (R): By the usual methods of calculation, the net factor payment in the banking sector amounts to zero.
    1. Both A and R are true and R is the correct explanation of A

    2. Both A and R are true but R is NOT a correct explanation of A

    3. A is true but R is false

    4. A is false but R is true

    • Assertion (A): Consumer's surplus is the difference between the potential price and the actual price.
    • Reason (R): There exists an inverse relationship between the price and the consumer's surplus.
    1. Both A and R are true and R is the correct explanation of A

    2. Both A and R are true but R is NOT a correct explanation of A

    3. A is true but R is false

    4. A is false but R is true

    • Assertion (A): The long run cost curve is L-shaped rather than U-shaped.
    • Reason (R): The new techniques of production of large plants reduce the total costs per unit of output.
    1. Both A and R are true and R is the correct explanation of A

    2. Both A and R are true but R is NOT a correct explanation of A

    3. A is true but R is false

    4. A is false but R is true

    • Assertion (A): The imposition of a per unit tax because the monopolist's average cost and marginal cost curves to shift up:
    • Reason (R): The per unit tax is like a variable cost.
    1. Both A and R are true and R is the correct explanation of A

    2. Both A and R are true but R is NOT a correct explanation of A

    3. A is true but R is false

    4. A is false but R is true

    • Assertion (A): Money is a link between the present and the future.
    • Reason (R): Money is a store of value
    1. Both A and R are true and R is the correct explanation of A

    2. Both A and R are true but R is NOT a correct explanation of A

    3. A is true but R is false

    4. A is false but R is true

  6. Assertion (A) According to Baumol, the transactions demand for cash varies with respect to the square-root of the volume of transactions. Reason (R): Transaction demand for money is a function of income.

    1. Both A and R are true and R is the correct explanation of A

    2. Both A and R are true but R is NOT a correct explanation of A

    3. A is true but R is false

    4. A is false but R is true

    • Assertion (A): There would be o trade-off between inflation and unemployment even in the short run if people's expectations are rational.
    • Reason (R): Rational expectations imply forecasting the future correctly
    1. Both A and R are true and R is the correct explanation of A

    2. Both A and R are true but R is NOT a correct explanation of A

    3. A is true but R is false

    4. A is false but R is true

    • Assertion (A): The major distinguishing feature of a commercial bank is its ability to create money.
    • Reason (R): It has a legal power to do so.
    1. Both A and R are true and R is the correct explanation of A

    2. Both A and R are true but R is NOT a correct explanation of A

    3. A is true but R is false

    4. A is false but R is true

    • Assertion (A): Factor price equalization theorem deals with the effect of trade on factor prices.
    • Reason (R): Trade in goods has no effect on factor prices.
    1. Both A and R are true and R is the correct explanation of A

    2. Both A and R are true but R is NOT a correct explanation of A

    3. A is true but R is false

    4. A is false but R is true

    • Assertion (A): Heckscher-Ohlin theory invalidated the classical theory of comparative costs.
    • Reason (R): Heckscher-Ohlin theory goes behind the comparative cost theory.
    1. Both A and R are true and R is the correct explanation of A

    2. Both A and R are true but R is NOT a correct explanation of A

    3. A is true but R is false

    4. A is false but R is true