Economy & Tax — Set 2

Correct Answer: C. Gross National Product

GNP stands for Gross National Product which measures the total value of goods and services produced by the residents of a country, regardless of where the production takes place. Unlike GDP, it includes income earned by citizens abroad but excludes income earned by foreigners within the country. It is a useful measure of a nation's wealth and economic health.

Correct Answer: C. Value Added Tax

VAT stands for Value Added Tax which is a consumption tax placed on a product whenever value is added at a stage of production and at final sale. It is intended to tax the value added by each business in the production chain. Most European and many Asian countries utilize this system.

Correct Answer: C. Foreign Exchange Management Act

FEMA stands for Foreign Exchange Management Act which replaced FERA in 1999 to facilitate external trade and payments. It was introduced to simplify the laws relating to foreign exchange in a globalized environment. FEMA treats violations as civil offenses rather than criminal ones.

Correct Answer: B. Tax Deducted at Source

TDS stands for Tax Deducted at Source which is a method of collecting income tax by deducting it at the very point of income generation. The deductor is responsible for remitting the amount to the government on behalf of the deductee. it ensures a steady stream of revenue for the government throughout the year.

Correct Answer: B. National Bank for Agriculture and Rural Development

NABARD stands for National Bank for Agriculture and Rural Development. It is the apex development bank in India providing credit and other facilities for the promotion and development of agriculture and rural areas. It was established on July 12, 1982, following the recommendations of the Shivaraman Committee.

Correct Answer: A. Micro, Small and Medium Enterprises

MSME stands for Micro, Small and Medium Enterprises. These enterprises are the backbone of many economies, contributing significantly to employment and exports. In India, they are classified based on investment in plant and machinery or equipment and annual turnover.

Correct Answer: D. Balance of Payments

BOP stands for Balance of Payments which is a record of all economic transactions between the residents of a country and the rest of the world. It includes the trade of goods, services, and capital. A balanced BOP indicates economic stability in external dealings.

Correct Answer: A. Small Industries Development Bank of India

SIDBI stands for Small Industries Development Bank of India. It is a development financial institution focused on the growth and development of micro, small, and medium-scale industries. It was established in 1990 as a subsidiary of IDBI.

Correct Answer: D. Repurchase Option

REPO stands for Repurchase Option or Repurchase Agreement. It is the rate at which the central bank of a country lends money to commercial banks in the event of any shortfall of funds. It is a key tool used by the RBI to control inflation and liquidity in India.

Correct Answer: A. Securities Transaction Tax

STT stands for Securities Transaction Tax which is a direct tax levied on the purchase or sale of securities listed on stock exchanges. it was introduced in India in 2004 to reduce tax evasion on capital gains. Different rates apply to different types of securities and transactions.