Insights Static Quiz -20, 2018
0 of 5 questions completed Questions:INSIGHTS IAS QUIZ ON STATIC SYLLABUS - 2018
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Question 1 of 5
1. Question
Government can counter budget deficits by
- Increasing direct taxes
- Reducing government spending
- Printing additional currency
- Reducing regulation to boost investments
- Lowering corporate taxes
Which of the above is/are correct?
Correct
Solution: d)
https://www.investopedia.com/terms/b/budget-deficit.asp
Countries can counter budget deficits by promoting economic growth through fiscal policies such as reducing government spending and increasing taxes. For example, one strategy is to reduce regulations and lower corporate taxes to improve business confidence and increase treasury inflows from taxes. A nation can print additional currency to cover payments on debts owed by issuing securities including Treasury bills and bonds. While this provides a mechanism to make payments, it does carry the risk of devaluing the nation’s currency.
Incorrect
- Solution: d)
https://www.investopedia.com/terms/b/budget-deficit.asp
Countries can counter budget deficits by promoting economic growth through fiscal policies such as reducing government spending and increasing taxes. For example, one strategy is to reduce regulations and lower corporate taxes to improve business confidence and increase treasury inflows from taxes. A nation can print additional currency to cover payments on debts owed by issuing securities including Treasury bills and bonds. While this provides a mechanism to make payments, it does carry the risk of devaluing the nation’s currency.
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Question 2 of 5
2. Question
With reference to the capital budget of the Government of India, consider the following statements:
- It incorporates transactions in the Public Account
- It includes borrowings by the government from the Reserve Bank of India
Which of the above statements is/are correct?
Correct
Solution: c)
Definition: Capital Budget consists of capital receipts and payments. It also incorporates transactions in the Public Account.
Description: Capital receipts are loans raised by the government from the public (which are called market loans), borrowings by the government from the Reserve Bank and other parties through sale of treasury bills, loans received from foreign bodies and governments, and recoveries of loans granted by the Central government to state and Union Territory governments and other parties.
Capital payments consist of capital expenditure on acquisition of assets like land, buildings, machinery, and equipment, as also investments in shares, loans and advances granted by the Central government to state and Union Territory governments, government companies, corporations and other parties.
Incorrect
Solution: c)
Definition: Capital Budget consists of capital receipts and payments. It also incorporates transactions in the Public Account.
Description: Capital receipts are loans raised by the government from the public (which are called market loans), borrowings by the government from the Reserve Bank and other parties through sale of treasury bills, loans received from foreign bodies and governments, and recoveries of loans granted by the Central government to state and Union Territory governments and other parties.
Capital payments consist of capital expenditure on acquisition of assets like land, buildings, machinery, and equipment, as also investments in shares, loans and advances granted by the Central government to state and Union Territory governments, government companies, corporations and other parties.
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Question 3 of 5
3. Question
A country can reduce its current account deficit by
- Decreasing the value of its exports relative to the value of imports
- Placing restrictions on imports, such as tariffs or quotas
- Improving domestic companies’ global competitiveness
Which of the above statements is/are correct?
Correct
Solution: b)
A country can reduce its current account deficit by increasing the value of its exports relative to the value of imports. It can place restrictions on imports, such as tariffs or quotas, or it can emphasize policies that promote exports, such as import substitution, industrialization or policies that improve domestic companies’ global competitiveness. The country can also use monetary policy to improve the domestic currency’s valuation relative to other currencies through devaluation, which reduces the cost of a country’s exports.
While a current account deficit can imply that a country is spending “beyond its means,” having a current account deficit is not inherently disadvantageous. If a country uses external debt to finance investments that have a higher return than the interest rate on the debt, it can remain solvent while running a current account deficit. If a country is unlikely to cover current debt levels with future revenue streams, however, it may become insolvent.
Read more: Current Account Deficit https://www.investopedia.com/terms/c/currentaccountdeficit.asp#ixzz59bl9x0EX
Incorrect
Solution: b)
A country can reduce its current account deficit by increasing the value of its exports relative to the value of imports. It can place restrictions on imports, such as tariffs or quotas, or it can emphasize policies that promote exports, such as import substitution, industrialization or policies that improve domestic companies’ global competitiveness. The country can also use monetary policy to improve the domestic currency’s valuation relative to other currencies through devaluation, which reduces the cost of a country’s exports.
While a current account deficit can imply that a country is spending “beyond its means,” having a current account deficit is not inherently disadvantageous. If a country uses external debt to finance investments that have a higher return than the interest rate on the debt, it can remain solvent while running a current account deficit. If a country is unlikely to cover current debt levels with future revenue streams, however, it may become insolvent.
Read more: Current Account Deficit https://www.investopedia.com/terms/c/currentaccountdeficit.asp#ixzz59bl9x0EX
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Question 4 of 5
4. Question
In 2017, the Union Budget was presented without the distinction between plan and non-plan expenditure. WIth reference to this move, consider the following statements:
- Distinction between plan and non-plan expenditure was removed due to the extinction of Planning Commission
- At present budgets are presented under the heads of revenue and capital expenditure
Which of the above statements is/are correct?
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Question 5 of 5
5. Question
The Article 112 of the Constitution of India deals with
Correct
Solution: a)
The Union Budget of India, also referred to as the Annual Financial Statement in the Article 112 of the Constitution of India,[1] is the annual budget of the Republic of India.
112. Annual financial statement.
113. Procedure in Parliament with respect to estimates.
114. Appropriation Bills.
115. Supplementary, additional or excess grants.
116. Votes on account, votes of credit and exceptional grants.
117. Special provisions as to financial Bills.
Incorrect
Solution: a)
The Union Budget of India, also referred to as the Annual Financial Statement in the Article 112 of the Constitution of India,[1] is the annual budget of the Republic of India.
112. Annual financial statement.
113. Procedure in Parliament with respect to estimates.
114. Appropriation Bills.
115. Supplementary, additional or excess grants.
116. Votes on account, votes of credit and exceptional grants.
117. Special provisions as to financial Bills.
