NTA UGC NET/JRF Exam, September 2024 (Commerce)

Total Questions: 100

21. The tax planning strategies used by multinational enterprises that exploit gaps and mismatches in tax rules to avoid paying tax is known as:

Correct Answer: B. BEPS
Solution:The tax planning strategy used by multinational enterprises that exploit gaps and mismatches in tax rules to avoid paying tax is known as Base Erosion and Profit Shifting (BEPS). BEPS refers to tax planning strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations where there is little or no economic activity, resulting in little or no overall corporate tax being paid. Strategies such as abusing tax treaties, transferring intangibles for less than market value, and using artificial arrangements to avoid establishing a tax residence are commonly used in BEPS. This strategy has significant implications for the global economy, leading to billions of dollars in tax revenue losses for governments worldwide. Efforts by the OECD and G20 have led to the development of the BEPS Action Plan aimed at providing governments with domestic and international instruments to address tax avoidance.

22. Which environment shapes the attitudes of human beings, though there may be great diversity in its impact?

Correct Answer: C. The Socio-Cultural Environment
Solution:The environment that shapes the attitudes of human beings, though there may be great diversity in its impact, is the Socio-Cultural Environment. This environment encompasses the beliefs, values, norms, customs, and practices of people within a given geographic area. These cultural aspects deeply influence human behaviour, including consumer preferences, work attitudes, management styles, and interpersonal relations. Cultural diversity can result in significant differences in how these elements manifest in different regions or among different groups within the same society. Understanding the socio-cultural environment is crucial for businesses to tailor their products and marketing strategies to meet the unique cultural needs and expectations of their target markets.

23. The liquidator after realizing the assets of the company should distribute the proceeds among below mentioned claimants in which order?

(a) Liquidator's remuneration and cost of expenses of winding up.
(b) Legal charges
(c) Claims of secured creditors
(d) Preferential creditors and creditors secured by floating charges
(e) Unsecured creditors
Choose the correct answer from the options given below:

Correct Answer: B. (b), (a), (c), (d), (e)
Solution:The liquidator, after realizing the assets of a company, should distribute the proceeds among the below-mentioned claimants in the following order: first, legal charges (b) must be addressed as these are fundamental to ensuring that the proceedings follow legal mandates and secure the assets involved. Next, the liquidator's remuneration and cost of expenses of winding up (a) are covered, recognizing the costs associated with administering the liquidation process itself. The claims of secured creditors (c) are prioritized following these, as secured creditors have claims that are backed by specific assets as collateral. Following this, preferential creditors and creditors secured by floating charges (d) are handled, with these creditors generally including employees and certain other preferential claims. Finally, unsecured creditors (e) receive any remaining funds, as their claims are not secured against the company's assets. This order ensures that the distribution is fair, respects legal priorities, and meets statutory obligations.

24. Match the List-I with List-II.

List-IList-II
(a) Buyer’s MindI. Members of Social-club
(b) Personal FactorII. Motivation
(c) Psychological FactorIII. Life Style
(d) Reference GroupIV. Black Box

Choose the correct answer from the options given below:

Correct Answer: D.
Solution:Matching List-I with List-II based on the context of marketing and consumer behaviour:
(a) Buyer's Mind is matched with IV, "Black Box," which refers to the internal thought processes and decisionmaking mechanisms that are not visible but influence the buyer's decisions.
(b) Personal Factor is matched with III, "Life Style," as personal factors include individual characteristics that impact consumer behaviour, such as lifestyle, personality, economic status, and occupation.
(c) Psychological Factor is matched with II, "Motivation," since psychological factors driving consumer behaviour include motivation, perception, learning, beliefs, and attitudes.
(d) Reference Group is matched with I, "Members of Social-club," which fits as reference groups are groups that a person identifies with or aspires to join, influencing their purchasing behaviour and attitudes.

25. The profit volume ratio of a company is 50% and the margin of safety is 40%. Calculate net profit if the sales volume is ₹ 1,00,000.

Correct Answer: C. 20,000
Solution:The calculation for net profit when the profit volume ratio is 50% and the margin of safety is 40% with sales volume being ₹ 1,00,000 proceeds as follows:
The profit volume ratio indicates that for each unit of sale, 50% contributes to the profit. The margin of safety indicates that actual sales are 40% higher than what is needed to break even, which means actual sales cover all fixed costs and provide additional revenue that contributes entirely to profit.
1. Calculate Break-Even Sales: The margin of safety tells us that the actual sales are 40% above the break-even point. Thus, the break-even sales can be calculated as:2. Calculate Profit: The net profit can then be derived from the difference between total sales and break-even sales, factoring in the profit volume ratio:Hence, the net profit when the sales volume is1,00,000, given a profit volume ratio of 50% and a margin of safety of 40%, is ₹20,000. This calculation shows how the margin of safety impacts profit by accounting for the additional sales over and above the break-even point.

26. The supply function is given as q = -100 + 10p. Find the elasticity of supply (Es) using point method, when price is₹15.

Correct Answer: B. Es = 3
Solution:The elasticity of supply (Es) can be calculated using the point elasticity method from the given supply function
q = -100 + 10p.
When the price p is 15, we first calculate the quantity supplied q by substituting p into the supply function:
q = -100 + 10 × 15
= -100 + 150 = 50
The elasticity of supply is then calculated using the formula:function with respect to price) is 10, as given by the coefficient of p in the supply function. Thus, substituting the values, we have:Therefore, the elasticity of supply at a price of 15 is 3, indicating that a 1% increase in price leads to a 3% increase in the quantity supplied. This result aligns with option (B).

27. Arrange the following phases of International Monetary System in chronological order (old to new).

(a) Gold Bullion Standard
(b) Gold Specie Standard
(c) Floating Exchange Rate
(d) Gold Exchange Standard
(e) Bretton Woods System
Choose the correct answer from the options given below:

Correct Answer: C. (b), (a), (d), (e), (c)
Solution:The chronological order of the phases of the International Monetary System from old to new is:
(b) Gold Specie Standard: This was the earliest system where currencies were directly convertible into gold.
(a) Gold Bullion Standard: Under this system, currency was convertible into gold bullion, primarily for international trade payments, rather than domestic use.
(d) Gold Exchange Standard: Established during the interwar period, under this system, currencies were pegged to other currencies that were convertible into gold, rather than directly to gold itself.
(e) Bretton Woods System: Initiated postWorld War II in 1944, this system involved fixed exchange rates where currencies were pegged to the U.S. dollar, which was convertible into gold.
(c) Floating Exchange Rate: Adopted after the collapse of the Bretton Woods System, currencies' values are determined by market forces without a peg to gold.

28. Matrix organisation violates which of the following management principles?

Correct Answer: D. Unity of Command
Solution:A matrix organization violates the management principle of Unity of Command. In a traditional hierarchy, each employee reports to one manager, ensuring clear authority and responsibility lines. However, in a matrix structure, an employee typically reports to multiple managers - often a functional manager and a project or product manager. This dual-reporting structure can lead to conflicts in authority and confusion in responsibility, thus conflicting with the principle of Unity of Command, which states that an employee should receive orders from only one superior.

29. The effect of exchange rate fluctuations on a firm's future cost and revenues is termed as:

Correct Answer: D. Operating Exposure
Solution:The effect of exchange rate fluctuations on a firm's future costs and revenues is termed Operating Exposure. This type of exposure, also known as economic exposure, encompasses the impact of exchange rate changes on a company's future cash flows and overall financial health. It is broader than transaction or translation exposure, as it considers the long-term effect of changes in exchange rates on market demand, prices, sales, and costs. Operating exposure is strategic and can influence fundamental business decisions and competitive positioning globally.

30. The Bretton Woods monetary system was based on the fixed rate monetary system. It lasted between the years:

Correct Answer: D. 1944 to 1971
Solution:The Bretton Woods monetary system, established in 1944 at a conference in Bretton Woods, New Hampshire, was based on a fixed exchange rate system. Under this system, currencies were pegged to the U.S. dollar, which was, in turn, convertible into gold at a fixed rate of $35 per ounce. This system aimed to provide stability in international economic transactions and prevent competitive devaluations of currencies. The system lasted until 1971 when the United States unilaterally terminated convertibility of the dollar to gold, effectively leading to the system's collapse and the transition to floating exchange rates. This period from 1944 to 1971 marks the duration of the Bretton Woods system.