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Question 1 of 5
1. Question
A receipt is a capital receipt if it satisfies which of the following conditions?
- The receipts must create a liability for the government.
- The receipts must cause a decrease in the Government assets.
Select the correct answer code:
Correct
Solution: c)
A receipt is a capital receipt if it satisfies any one of the two conditions:
(i) The receipts must create a liability for the government. For example, Borrowings are capital receipts as they lead to an increase in the liability of the government. However, tax received is not a capital receipt as it does not result in creation of any liability.
(ii) The receipts must cause a decrease in the assets. For example, receipts from sale of shares of public enterprise is a capital receipt as it leads to reduction in assets of the government.
Incorrect
Solution: c)
A receipt is a capital receipt if it satisfies any one of the two conditions:
(i) The receipts must create a liability for the government. For example, Borrowings are capital receipts as they lead to an increase in the liability of the government. However, tax received is not a capital receipt as it does not result in creation of any liability.
(ii) The receipts must cause a decrease in the assets. For example, receipts from sale of shares of public enterprise is a capital receipt as it leads to reduction in assets of the government.
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Question 2 of 5
2. Question
The term ‘Kostak rate’ sometimes seen in news, is related to
Correct
Solution: c)
What is the Kostak rate?
It relates to an IPO application. So, the rate at which an investor buys an IPO application before the listing is termed the Kostak rate.
Incorrect
Solution: c)
What is the Kostak rate?
It relates to an IPO application. So, the rate at which an investor buys an IPO application before the listing is termed the Kostak rate.
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Question 3 of 5
3. Question
Consider the following statements regarding Debt-to-GDP ratio.
- Investors often look at the debt-to-GDP metric to assess the government’s ability of finance its debt.
- The NK Singh Committee on FRBM had envisaged an overall debt-to-GDP ratio of 40 per cent for the central government and states put together.
- Lower debt-to GDP ratios have fuelled economic crises worldwide.
Which of the above statements is/are correct?
Correct
Solution: a)
The debt-to-GDP ratio indicates how likely the country can pay off its debt. Investors often look at the debt-to-GDP metric to assess the government’s ability of finance its debt. Higher debt-to GDP ratios have fuelled economic crises worldwide.
The NK Singh Committee on FRBM had envisaged a debt-to-GDP ratio of 40 per cent for the central government and 20 per cent for states aiming for a total of 60 per cent general government debt-to-GDP.
Incorrect
Solution: a)
The debt-to-GDP ratio indicates how likely the country can pay off its debt. Investors often look at the debt-to-GDP metric to assess the government’s ability of finance its debt. Higher debt-to GDP ratios have fuelled economic crises worldwide.
The NK Singh Committee on FRBM had envisaged a debt-to-GDP ratio of 40 per cent for the central government and 20 per cent for states aiming for a total of 60 per cent general government debt-to-GDP.
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Question 4 of 5
4. Question
After liberalization, India has undergone structural change in its economy. In this context, which of the following statements best describes ‘structural change’?
Correct
Solution: c)
Structural change represents the fundamental changes that occurring in the basic features of the economy over a long period.
Development is described as growth plus structural changes. Structural changes constitute to the most important part of development.
Structural changes refer to long term and persistent shifts in the sectoral composition of economic systems.
Structure of an economy refers to the fundamental features of the economy like the size of the primary, secondary and tertiary sectors in terms of their contribution to GDP and employment. Other important elements of structure are trade composition (the items that we export and import), saving GDP ratio (level of savings as a percent of GDP) etc
Incorrect
Solution: c)
Structural change represents the fundamental changes that occurring in the basic features of the economy over a long period.
Development is described as growth plus structural changes. Structural changes constitute to the most important part of development.
Structural changes refer to long term and persistent shifts in the sectoral composition of economic systems.
Structure of an economy refers to the fundamental features of the economy like the size of the primary, secondary and tertiary sectors in terms of their contribution to GDP and employment. Other important elements of structure are trade composition (the items that we export and import), saving GDP ratio (level of savings as a percent of GDP) etc
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Question 5 of 5
5. Question
Generally, the Government implements the policy of Disinvestment to
- Encourage wider share of ownership
- Introduce competition and market discipline
- Reduce the financial burden on the Government
- Depoliticise non-essential services
Select the correct answer code:
Correct
Solution: d)
Disinvestment can be defined as the action of an organisation (or government) selling or liquidating an asset or subsidiary. It is also referred to as ‘divestment’ or ‘divestiture.’
In most contexts, disinvestment typically refers to sale from the government, partly or fully, of a government-owned enterprise.
The main objectives of disinvestment were:
- To reduce the financial burden on the Government
- To improve public finances
- To introduce, competition and market discipline
- To fund growth
- To encourage wider share of ownership
- To depoliticise non-essential services
Incorrect
Solution: d)
Disinvestment can be defined as the action of an organisation (or government) selling or liquidating an asset or subsidiary. It is also referred to as ‘divestment’ or ‘divestiture.’
In most contexts, disinvestment typically refers to sale from the government, partly or fully, of a government-owned enterprise.
The main objectives of disinvestment were:
- To reduce the financial burden on the Government
- To improve public finances
- To introduce, competition and market discipline
- To fund growth
- To encourage wider share of ownership
- To depoliticise non-essential services
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