Economy & Tax — Set 3

Correct Answer: C. Minimum Alternate Tax

• **Minimum Alternate Tax** = MAT is a tax introduced to ensure that companies paying zero tax through deductions still pay a minimum amount to the government. • **Book profit percentage** — MAT is calculated as a percentage of the company's book profit, preventing complete tax avoidance. • 💡 Wrong-option analysis: [Option A]: Incorrect; 'MAT' does not stand for Monthly Asset Tax; [Option B]: Incorrect; 'MAT' is not Maximum Accountable Toll; [Option D]: Incorrect; 'MAT' refers to a tax provision, not a Management Assessment Tool.

Correct Answer: A. Consumer Price Index

• **Consumer Price Index** = CPI measures changes in the price level of a weighted average market basket of consumer goods and services. • **Policymaking indicator** — It is a major economic indicator used to calculate the cost of living and identify periods of inflation or deflation for policymaking. • 💡 Wrong-option analysis: [Option B]: Incorrect; 'CPI' measures consumer prices, not corporate profits; [Option C]: Incorrect; 'CPI' is an index, not a Central Price Institute; [Option D]: Incorrect; 'CPI' focuses on consumer prices, not Capital Production.

Correct Answer: D. Corporate Social Responsibility

• **Corporate Social Responsibility** = CSR refers to a business model where a company is socially accountable to itself, its stakeholders, and the public. • **Sustainable development** — CSR encourages businesses to contribute to sustainable development and societal well-being. • 💡 Wrong-option analysis: [Option A]: Incorrect; 'CSR' is about broader social accountability, not just Consumer Service Ratio; [Option B]: Incorrect; 'CSR' refers to corporate responsibility, not Capital System Reform; [Option C]: Incorrect; 'CSR' is not Central Statutory Reserve.

Correct Answer: B. National Savings Certificate

• **National Savings Certificate** = NSC is a fixed-income post office savings scheme designed for small investors. • **Section 80C** — NSC offers tax benefits under Section 80C, making it a popular and safe investment option. • 💡 Wrong-option analysis: [Option A]: Incorrect; 'NSC' is a specific savings certificate, not a general New Scheme of Capital; [Option C]: Incorrect; 'NSC' is a savings product, not a National Securities Commission; [Option D]: Incorrect; 'NSC' does not stand for Net Standard Credit.

Correct Answer: C. Liberalization, Privatization, and Globalization

• **Liberalization, Privatization, and Globalization** = LPG represents the key pillars of the New Economic Policy implemented for economic reforms. • **1991** — The LPG policy was a cornerstone of India's New Economic Policy of 1991, aiming to modernize the economy. • 💡 Wrong-option analysis: [Option A]: Incorrect; while important, 'LPG' in this context does not stand for Labor, Production, and Growth; [Option B]: Incorrect; 'LPG' is also Liquid Petroleum Gas, but not in economics policy shifts; [Option D]: Incorrect; 'LPG' does not represent Loans, Profits, and Gains.

Correct Answer: A. Export-Import Bank

• **Export-Import Bank** = EXIM Bank stands for the Export-Import Bank of India, a premier financial institution. • **1982** — EXIM Bank was established in 1982 to promote and finance international trade by coordinating institutions. • 💡 Wrong-option analysis: [Option B]: Incorrect; 'EXIM' refers to export-import, not Extra-Internal Management Bank; [Option C]: Incorrect; 'EXIM' is specifically for trade finance, not general Exchange and Investment Management; [Option D]: Incorrect; 'EXIM' does not stand for Executive and Industrial Monitoring Bank.

Correct Answer: B. Direct Taxes Code

• **Direct Taxes Code** = DTC was a proposed reform to replace the Income Tax Act of 1961, aiming to simplify direct tax laws. • **1961 Act replacement** — DTC was proposed to replace the Income Tax Act of 1961 with simpler and more efficient direct tax laws. • 💡 Wrong-option analysis: [Option A]: Incorrect; 'DTC' refers to a comprehensive tax code, not Daily Tax Collection; [Option C]: Incorrect; 'DTC' is about direct tax reforms, not Duty Transaction Charge; [Option D]: Incorrect; 'DTC' is a proposed legal framework, not a Department of Tax Compliance.

Correct Answer: D. Earnings Before Interest, Taxes, Depreciation, and Amortization

• **Earnings Before Interest, Taxes, Depreciation, and Amortization** = EBITDA is a measure of a company's overall financial performance. • **Profitability comparison** — It allows for a comparison of profitability between companies with different capital structures by excluding certain non-operating and non-cash expenses. • 💡 Wrong-option analysis: [Option A]: Incorrect; 'EBITDA' does not stand for Economic Benefit Including Tax, Debt, and Assets; [Option B]: Incorrect; 'EBITDA' is not Equity Balance in Trading, Dividends, and Accounts; [Option C]: Incorrect; 'EBITDA' is a financial metric, not Every Business Information Targeting Daily Assets.

Correct Answer: A. Public Distribution System

• **Public Distribution System** = PDS is a government-managed system for distributing food grains and essential commodities at subsidized prices. • **1997 revamp** — In 1997, PDS was revamped as the Targeted Public Distribution System (TPDS) to better serve the poor. • 💡 Wrong-option analysis: [Option B]: Incorrect; 'PDS' refers to food distribution, not a Private Deposit Scheme; [Option C]: Incorrect; 'PDS' is a structured distribution network, not Proportional Delivery Service; [Option D]: Incorrect; 'PDS' is about commodity distribution, not a Price Determination Standard.

Correct Answer: C. Gross Value Added

• **Gross Value Added** = GVA measures the value of goods and services produced in an area, industry, or sector of an economy. • **GDP relationship** — GVA is essentially GDP minus taxes on products and plus subsidies on products, providing a detailed sectoral picture. • 💡 Wrong-option analysis: [Option A]: Incorrect; 'GVA' relates to domestic production value, not Global Volume Assessment; [Option B]: Incorrect; 'GVA' is an economic measure, not a Government Verified Account; [Option D]: Incorrect; 'GVA' is about total value added, not General Variable Asset.