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What is the “base effect”?
a) impact of drastic deficiency in supply due to crops failure
b)  impact of the surge in demand due to rapid economic growth
c)  impact of the price levels of the previous year on the calculation of inflation rate
d) None of the statements above is correct
Ans: C

2. Which one of the following is not a characteristic of “Value Added Tax” (VAT)?
a) It is a  system of taxation based on  multi-point destination
b) It is a tax levied at each stage of transaction in the production –distribution chain
c) It is a tax on the end-use of goods and  services and must ultimately be borne by the consumer
d) It is a subject of the Central Government and the State Governments are the only facilitator for its implementation
Ans: D

3. “A closed economy” is an economy where
a) The money supply is fully controlled
b) Deficit financing takes place
c) Only exports take place
d) Neither exports nor imports take place
Ans: D

4. Kari Marx explained the process of class struggle with the help of which one of the following theories?
a) Empirical liberalism
b) Existentialism
c) Darwin’s theory of evolution
d) Dialectical materialism
Ans: D

5. Both Foreign Direct Investment (FDI) and Foreign Institutional Investor (FII) are related
to invest in a country. Which of the following best represents an
the important difference between the two?
a)  FDI only brings in the capital, while FII helps bring better management skills and technology
b) FII helps increasing capital availability in general, while FDI only targets specific sectors
c) FII targets primary market, while FDI flows only into the secondary market
d)FDI  is considered to be less stable than FII
Ans: B

6. With what purpose is the Government of India promoting the concept of “Mega Food Parks”?
1. To facilitate good infrastructure for the food processing industry.
2. To reduce wastage and  increase the processing of perishable items
3. To provide eco-friendly and emerging food processing technologies to entrepreneurs.
Choose the correct answer using the codes provided below:
a) 2 and 3 only  b) 1,2 and 3  c) 1 only d)  1 and 2 only
Ans: B

7. Microfinance is the provision of financial services to people of low-income groups. This
includes both the consumers and the self-employed. The service/services rendered under
micro-finance is/are:
1. Credit facilities
2. Savings facilities
3. Insurance facilities
4. Fund transfer facilities
Choose the correct answer using the codes provided below:
a)1,2,3 and 4  b) 1 and 4 only c) 2 and 3 only d) 1 only
Ans: A

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