Poverty, Planning, Finance and Economic/Social Development (Part-II)

Total Questions: 50

21. Supply of money remaining the same when there is an increase in demand for money, there will be : [2013-1]

(a) a fall in the level of prices
(b) an increase in the rate of interest
(c) a decrease in the rate of interest
(d) an increase in the level of income and employment

Correct Answer: (b) an increase in the rate of interest

Solution:Supply of money remaining the same when there is an increase in demand for money, there will be an increase in the rate of interest and vice-versa.

22. Economic growth in country X will necessarily have to occur if : [2013-1]

(a) there is technical progress in the world economy
(b) there is population growth in X
(c) there is capital formation of X
(d) the volume of trade grows in the world economy

Correct Answer: (c) there is capital formation of X

Solution:A country's economic growth is reflected through capital formation, which in turn encourages private enterprises in enhancing the growth of a country's economy.

23. If the interest rate is decreased in an economy, it will : [2014-1]

(a) decrease the consumption expenditure in the economy
(b) increase the tax collection of the Government
(c) increase the investment expenditure in the economy
(d) increase the total savings in the economy

Correct Answer: (c) increase the investment expenditure in the economy

Solution:When interest rates decreases then investment expenditure by businesses on capital goods like factories and equipment will increase in an economy.

24. With reference to Union Budget, which of the following is/are covered under Non-Plan Expenditure? [ [2014-1]

1. Defence expenditure

2. Interest payments

3. Salaries and pensions

4. Subsidies

Select the correct answer using the code given below.

(a) 1 only
(b) 2 & 3 only
(c) 1, 2, 3 & 4
(d) None

Correct Answer: (c) 1, 2, 3 & 4

Solution:Non-plan expenditure covers interest payments, subsidies (mainly on food and fertilisers), wage and salary payments to government employees, grants to States and Union Territories governments, pensions, police, economic services in various sectors, defence, loans to public enterprises, loans to States, Union Territories and foreign governments.

25. The sales tax you pay while purchasing a toothpaste is a: [2014-1]

(a) tax imposed by the Central Government
(b) tax imposed by the Central Government but collected by the State Government
(c) tax imposed by the State Government but collected by the Central Government
(d) tax imposed and collected by the State Government

Correct Answer: (d) tax imposed and collected by the State Government

Solution:Taxes on tooth paste come under GST which is administered by State government.Sales tax is paid to sales tax authority in the state from where the goods are moved.

The Goods and Services Tax (GST) is an indirect tax-taxation is levied on the supply of goods and services and is ultimately paid by the consumer.

26. What does venture capital mean? [2014-1]

(a) A short-term capital provided to industries
(b) A long-term start-up capital provided to new entrepreneurs
(c) Funds provided to industries at times of incurring losses
(d) Funds provided for replacement and renovation of industries

Correct Answer: (b) A long-term start-up capital provided to new entrepreneurs

Solution:Venture capital (VC) is a long term financial capital provided to early-stage, high-potential, growth startup companies or new companies.

27. Which of the following are associated with 'Planning' in India? [2014-1]

(a) 1, 2 & 5 only
(b) 1, 3 & 4 only
(c) 2 & 5 only
(d) 1, 2, 3, 4 & 5

Correct Answer: (c) 2 & 5 only

Solution:Finance commission is involved in distribution of taxes and grants. It is not involved in planning. So by just eliminating all options involving statement 1, we get answer (c) correct.

28. A decrease in tax to GDP ratio of a country indicates which of the following? [2015-1]

1. Slowing economic growth rate

2. Less equitable distribution of national income

Select the correct answer using the code given below.

(a) I only
(b) 2 only
(c) Both 1 & 2
(d) Neither 1 nor 2

Correct Answer: (a) I only

Solution:A tax-to-GDP ratio is a gauge of a nation's tax revenue relative to the size of its economy as measured by gross domestic product (GDP).

The tax-to-GDP ratio is a measure of a nation's tax revenue relation to the size of its economy.

It determines how well a nation's governemnt use its economic resources via taxation.

Developed nations typically have higher tax-to-GDP ratios than developing nations.

If the tax to GDP ratio is low it shows a slow economic growth rate.

The ratio represents that the governement can finance its expenditure.

A higher tax to GDP ratio means that an economy's tax buoyancy is strong.

A lower tax-to-GDP ratio puts pressure on the governemnt to meet its fiscal deficit targets.

29. With reference to 'Indian Ocean Rim Association for Regional Cooperation (IOR-ARC)', consider the following statements: [2015-1]

1. It was established very recently in response to incidents of piracy and accidents of oil spills.

2. It is an alliance meant for maritime security only.

Which of the statements given above is / are correct?

(a) 1 only
(b) 2 only
(c) Both 1 & 2
(d) Neither 1 nor 2

Correct Answer: (d) Neither 1 nor 2

Solution:IOR-ARC is a regional cooperation initiative of the Indian Ocean Rim countries which was established in Mauritius in March 1997 with the aim of promoting economic and technical cooperation. IOR-ARC is the only pan-Indian ocean grouping. It brings together countries from three continents having different sizes, economic strengths, and a wide diversity of languages, cultures. It aims to create a platform for trade, socio-economic and cultural cooperation in the Indian Ocean rim area, which constitutes a population of about two billion people. Presently it has 19 members- Australia, Bangladesh, India, Indonesia, Iran, Kenya, Malaysia, Madagascar.

Mauritius, Mozambique, Oman, Seychelles, Singapore, South Africa, Sri Lanka, Tanzania, Thailand, UAE and Yemen.

30. Consider the following statements: [2015-1]

1. The Accelerated Irrigation Benefits Programme was launched during 1996-97 to provide loan assistance to poor fanners.

2. The Command Area Development Programme was launched in 1974-75 for the development of water-use efficiency.

Which of the statements given above is/are correct?

(a) 1 only
(b) 2 only
(c) Both 1 & 2
(d) Neither 1 nor 2

Correct Answer: (b) 2 only

Solution:The Command Area development programme was launched in 1974-75 as a centrally sponsored scheme and its main objective was to improve the utilization of the created irrigation potential and optimizing the agricultural production and productivity from the irrigated lands.

The Accelerated Irrigation Benefit Programme (AIBP) was launched during 1996-1997 to give loan assistance to the States to help them complete some of the incomplete major/medium irrigation projects which were at an advanced stage of completion and to create additional irrigation potential in the country.

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