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Prelims-IAS – ECONOMICS MCQ-32

1.. Consider the following statements about General Anti-avoidance rules:

  1. It allows tax officials to deny tax benefits, if a deal is found without any commercial purpose other than tax avoidance.
  2. It has been mooted in the backdrop of the exploitation of DTAA between India and foreign countries by investors.
  3. It does not allow tax officials to target participatory notes.
  4. It was first proposed as a part of proposed Direct Tax Code of India in 2009.

Which of the statement(s) given above is/are correct?

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


2.. Exchange rate is an important determinant of India’s foreign trade. In this regard which of the following is/are not true with respect to India?

  1. When the real exchange rate is more than the nominal exchange rate the rupee is said to be undervalued.
  2. US FED taper has resulted in appreciation in the rupee thus making Indian exports uncompetitive.
  3. A devaluation is said to occur when exchange rate is increased by the government.

Select the correct answer using the codes given below.
(a) 1, 2, and 3
(b) 2 and 3 only

(c) 1 and 2 only
(d) 3 only


3..Tarapore Committee was associated with which one of the following?

(a)  Special Economic Zones.
(b)  Fuller capital account convertibility.
(c)  Foreign exchange reserves.
(d)  Effect of oil-prices on the Indian economy.


4.. Consider the following statements regarding Double Taxation Avoidance Agreements (DTAAs):

  1. DTAAs are Bilateral treaties that promote cross-border economic activity.
  2. Under the revised India Mauritius Treaty, India shall have the right to tax capital gains arising from selling of shares by a Mauritius investor acquired before or after April 01, 2017 in a company resident in India.
  3. DTAAs provide mechanism for exchange of information that could help unearth all of India’s black money.

Which of the statements given above is/are correct?
(a) 3 only
(b) 1 only
(c) 2 and 3 only
(d) 1 and 2 only


5.. With reference to currency appreciation, consider the following statements:

  1. It may lead to increase in exports.
  2. It may help in controlling inflation.
  3. Increase in NRI deposits leads to currency appreciation.
Which of the statements given above is/are correct?

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


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