1..Consider the following statements:

  1. The revenue deficit of the government denotes the borrowing of the government for the day to day activities.
  2. The earnings from the spectrum sales are included in the revenue account of the government.
  3. The earnings from disinvestment are included in the capital account.

Which of the above is/are correct?

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

  • ANS-A
  • The earnings from the spectrum sales are included in the capital account of the country.

2..Consider the following statements about Insolvency and Bankruptcy Code Bill, 2016:

  1. It sets up Insolvency and Bankruptcy Board of India.
  2. It creates time-bound processes for insolvency resolution of companies and individuals.
  3. The Debt Recovery Tribunal (DRT) will adjudicate insolvency resolution for individuals.

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

  • ANS-D
  • The Code creates time-bound processes for insolvency resolution of companies and individuals.
  • These processes will be completed within 180 days.
  • If insolvency cannot be resolved, the assets of the borrowers may be sold to repay creditors.
  • The resolution processes will be conducted by licensed insolvency professionals (IPs).
  • These IPs will be members of insolvency professional agencies (IPAs).
  • IPAs will also furnish performance bonds equal to the assets of a company under insolvency resolution.
  • Information utilities (IUs) will be established to collect, collate and disseminate financial information to facilitate insolvency resolution.
  • The National Company Law Tribunal (NCLT) will adjudicate insolvency resolution for companies.
  • The Debt Recovery Tribunal (DRT) will adjudicate insolvency resolution for individuals.
  • The Insolvency and Bankruptcy Board of India will be set up to regulate functioning of IPs, IPAs and IUs.

3..Which of the following is an example of ‘Pigovian Tax’?

(a) Tax on Diesel
(b) Education Cess
(c ) Value Added Tax (VAT)
(d) Compulsory contribution for disaster relief
  • ANS -A

  • Pigovian tax is a special tax that is often levied on companies that pollute the environment or create excess social costs, called negative externalities, through business practices. In a true market economy, a Pigovian tax is the most efficient and effective way to correct negative externalities. Tax on diesel, tax on tobacco products and alcohol are examples of Pigouvian Tax.

4..The decrease in official reserves of a country equals its:

(a) Trade deficit
(b) Current Account deficit
(c) Capital Account deficit
(d) Balance of payments deficit

  • ANS-D
  • A country that has a deficit in its current account (spending more abroad than it receives from sales to the rest of the world) must finance it by selling assets or by borrowing abroad. Thus, any current account deficit is of necessity financed by a net capital inflow.
  • Alternatively, the country could engage in official reserve transactions, running down its reserves of foreign exchange, in the case of a deficit by selling foreign currency in the foreign exchange market. The decrease (increase) in official reserves is called the overall balance of payments deficit (surplus).

5..The sales tax you pay while purchasing a newspaper is a

(a)  tax levied, collected and retained by the centre.

(b)  tax levied by the centre but collected and appropriated by the states.

(c)  tax levied and collected by the centre but assigned to the states.

(d)  tax levied and collected and retained by States.

  • ANS-C
  • Following taxes are levied and collected by the Centre but assigned to the States:
    (a) duties in respect of succession to property other than agricultural land;
    (b) estate duty in respect of property other than agricultural land;
    (c) terminal taxes on goods or passengers carried by railway, sea or air;
    (d) taxes on railway fares and freights;
    (e) taxes other than stamp duties on transactions in stock exchanges and futures markets;
    (f) taxes on the sale or purchase of newspapers and on advertisements published therein;
    (g) taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter State trade or commerce;
    (h) taxes on the consignment of goods (whether the consignment is to the person making it or to any other person), where such consignment takes place in the course of inter State trade or commerce


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