Economics (Part – IV) - Mock Test 365

Total Questions: 50

21. The basis of determining dearness allowance to employees in India is________ . [S.S.C. Online C.G.L.(T-I) 9.09.2016 (Shift-III)]

(a) National Income
(b) Consumer Price Index
(c) Standard of Living
(d) Inflation Rate

Correct Answer: (b) Consumer Price Index

Solution:The basis of determining dearness allowance to employees in India is Consumer Price Index. This Index is compiled for Industrial Workers residing in 70 centers of industrial importance in the country.

22. The main effect of Direct Taxes is. [S.S.C. Online C.G.L. (T-I) 28.08.2016 (Shift-I)]

(a) on the prices of food items
(b) on consumer goods
(c) on capital goods
(d) on income

Correct Answer: (d) on income

Solution:Direct tax is a type of tax where the incidence and impact of taxation fall on the same entity. The burden of direct taxation cannot be passed from one person to another. These are primarily income or wealth taxes. Direct taxes include income tax, corporate tax, property tax, inheritance tax, and gift tax.

23. Which type of foreign investment is considered unsafe? [S.S.C. Online C.G.L. (T-I) 9.09.2016 (Shift-II)]

(a) Foreign Direct Investment (FDI)
(b) Portfolio Investment
(c) NRI Deposits
(d) External Commercial Borrowings

Correct Answer: (b) Portfolio Investment

Solution:Portfolio Investments are considered unsafe. These are investments in the form of a group (portfolio) of assets, including transactions in equity securities, common stock, debt securities, banknotes, bonds, and debentures. A portfolio investment is an investment made by an investor who is not involved in the management of a company.

24. An is an investment made by a firm or individual in one country into business interests located in another country. [S.S.C. JE Electrical Exams 24.03.2021 (Shift-II)]

(a) CRR
(b) Forex
(c) SEZ
(d) FDI

Correct Answer: (d) FDI

Solution:An FDI (Foreign Direct Investment) is an investment made by a firm or individual in one country into business interests located in another country.

25. In which of the following sectors, 100% FDI in equity into India through automatic route is NOT permitted as per India's FDI Policy? [S.S.C. JE Electrical Exams 24.03.2021 (Shift-II)]

(a) Construction Development Projects
(b) Industrial Parks
(c) Private Security Agencies
(d) Maintenance and Repair Organisations

Correct Answer: (c) Private Security Agencies

Solution:India has attracted a total FDI amount 62,001 million US$ in 2018-19. The service sector has the highest share in India's FDI share amount of US$ 80,670.79 from April 2000 to December 2019. Agriculture, Animal Husbandry, Auto components, and E-commerce activities have the permission of 100% FDI through automatic route, whereas private security agencies do not have the permission.

26. Which of the following measures will not increase a nation's wealth? [S.S.C. Online CHSL (T-I) 30.01.2017 (Shift-III)]

(a) investing in new companies
(b) increasing efficiency of factories
(c) converting grasslands into orchards
(d) By redistributing taxes as subsidies

Correct Answer: (d) By redistributing taxes as subsidies

Solution:The redistribution of taxes in the form of subsidies will not increase the wealth of the nation. Whereas investment in new companies, increasing efficiency of factories and converting grasslands into orchards will increase the wealth of the nation.

27. Under which act the permanent target of the government is determined to reduce the fiscal deficit in India? [S.S.C. Online MTS (T-I) 16.08.2019 (Shift-III)]

(a) RBI Act
(b) FRBM Act
(c) FEMA Act
(d) POCSO Act

Correct Answer: (b) FRBM Act

Solution:Under the FRBM (Fiscal Responsibility and Budget Management) Act, 2003, a permanent target is set for the government to reduce the fiscal deficit in India.

28. A buffer stock is created for the distribution of food grains, this price is also known as________ . [S.S.C. Online Constable GD 2.03.2019 (Shift-II)]

(a) cost price
(b) Issue price
(c) fair value
(d) reduced price

Correct Answer: (b) Issue price

Solution:Buffer stock is created to distribute food grains to the poor section of society at a price less than the market price, this price is also called the issue price (Minimum Support Price).

29. When the government's total revenue, excluding borrowings, is less than the planned expenditure, it is called: [S.S.C. Online Constable GD 18.02.2019 (Shift-II)]

(a) Deficit financing
(b) Budget shortfall
(c) Revenue deficit
(d) Fiscal deficit

Correct Answer: (d) Fiscal deficit

Solution:Fiscal deficit Total expenditure Total receipts excluding borrowings. It is the amount of borrowing the government has to resort to meet its expenses. A large deficit means a large amount of borrowing.

30. Fiscal policy in India is formulated by- [S.S.C. Online C.G.L.(T-I) 11.09.2016 (Shift-III)]

(a) Reserve Bank of India
(b) Planning Commission
(c) Finance Ministry
(d) SEBI

Correct Answer: (c) Finance Ministry

Solution:In India, fiscal policy is formulated by the Ministry of Finance through its budget proposals. RBI formulates monetary policy. The Finance Commission gives recommendations about allocation of financial resources between center and states. And the Planning Commission formulates Five Year Plans.

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Economics (Part – IV)