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Prelims-IAS –ECONOMICS MCQ-17

1..Which of the following measure(s) is/are to reduce fiscal deficit?

  1. Cutting subsidies
  2. Decrease disinvestment proceeds
  3. Cut plan expenditure
  4. Monetary easing

Select the correct answer using code given below.
(a) 1 and 4 only
(b) 1 and 3 only
(c) 1, 2, 3 and 4
(d) 1 only


2..With reference to the Finance Commission, consider the following statements:

  1. It recommends regarding the distribution of the net proceeds of taxes between the Union and the states.
  2. The divisible pool consists of all taxes including surcharges and cess levied for specific purpose.
  3. The FFC (Fourteenth Finance Commission) has radically enhanced the share of the states in the central divisible pool from the current 32 percent to 42 per cent which is the biggest ever increase in vertical tax devolution.

Which of the statements given above is/are correct?
(a) 2 and 3 only
(b) 2 only

(c) 1 and 3 only

(d) 1, 2 and 3 only


3..Which one of the following is not a feature of “Value Added Tax”?

(a)  It is a multi-point destination-based system of taxation .

(b)  It is a tax levied on value addition at each stage of transaction in the production-distribution chain.

(c)  It is a tax on the final consumption of goods or services and must ultimately be borne by the consumer.

(d)  It is basically subject of the Central Government and the State Governments are only a facilitator for its successful implementation.


4..Consider the following statements regarding the term “Income Distance”:

  1. Fourteenth Finance Commission has recommended a 50% weightage to Income Distance while deciding sharing of revenue between States.
  2. Fourteenth Finance Commission defines Income Distance as the distance of actual per capita income of a State from the State with the highest per capita income.
  3. Higher income distance signifies higher development of the State.

Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 1 only

(c) 3 only
(d) 2 and 3 only


5..Consider the following statements with regard to the Goods and Services Tax (GST):

  1. It requires a constitutional amendment so that both center and states can frame laws with respect to GST.
  2. It attempts to harmonize the existing system of taxation and hence will facilitate business across the country.
  3. There will be a GST Council which will make recommendations on the working of the GST.
  4. The disputes among the states and between the center and state will be settled by the SC of India.

Which of the above is/are correct?

(a) 1 and 2 only
(b) 3 and 4 only
(c) 1, 2 and 3 only
(d) All of the above


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