{"id":13420,"date":"2025-09-30T12:50:16","date_gmt":"2025-09-30T11:50:16","guid":{"rendered":"https:\/\/mcqsadda.com\/?p=13420"},"modified":"2025-10-24T06:03:04","modified_gmt":"2025-10-24T05:03:04","slug":"fiscal-policy-and-monetary-policy-top-100-mcqs-with-answer-and-explanation","status":"publish","type":"post","link":"https:\/\/mcqsadda.com\/index.php\/2025\/09\/30\/fiscal-policy-and-monetary-policy-top-100-mcqs-with-answer-and-explanation\/","title":{"rendered":"Fiscal Policy and Monetary Policy\u00a0Top 100 MCQs With Answer and Explanation"},"content":{"rendered":"\n

1. Fiscal policy refers to:<\/mark><\/strong>
A) Money supply control
B) Government\u2019s revenue and expenditure decisions
C) Credit regulation
D) Foreign trade policy
Answer: B<\/strong>
Explanation: Fiscal policy uses taxation and spending to influence the economy.<\/p>\n\n\n\n

2. Who formulates fiscal policy in India?<\/mark><\/strong>
A) RBI
B) SEBI
C) Ministry of Finance
D) NITI Aayog
Answer: C<\/strong>
Explanation: The Finance Ministry prepares fiscal policy through budgetary measures.<\/p>\n\n\n\n

3. The main instruments of fiscal policy are:<\/mark><\/strong>
A) Taxation and public expenditure
B) Repo rate and CRR
C) Inflation targeting
D) FDI policy
Answer: A<\/strong><\/p>\n\n\n\n

4.<\/mark><\/strong> A budget deficit occurs when:<\/mark><\/strong>
A) Revenue > Expenditure
B) Expenditure > Revenue
C) Tax = Expenditure
D) None
Answer: B<\/strong><\/p>\n\n\n\n

5.<\/mark><\/strong> Expansionary fiscal policy is used during:<\/mark><\/strong>
A) Inflation
B) Depression\/recession
C) Balance of payments surplus
D) None
Answer: B<\/strong>
Explanation: Government increases spending or reduces taxes to boost demand.<\/p>\n\n\n\n

6. Contractionary fiscal policy is used during:<\/mark><\/strong>
A) High inflation
B) Recession
C) Deflation
D) Stagnation
Answer: A<\/strong><\/p>\n\n\n\n

7. Direct taxes include:
<\/mark><\/strong>A) GST
B) Excise duty
C) Income tax
D) Customs duty
Answer: C<\/strong><\/p>\n\n\n\n

8. Indirect taxes include:
<\/mark><\/strong>A) Corporate tax
B) Income tax
C) Wealth tax
D) GST
Answer: D<\/strong><\/p>\n\n\n\n

9. Fiscal deficit means:
<\/mark><\/strong>A) Total expenditure \u2013 (Revenue receipts + Non-debt receipts)
B) Revenue expenditure \u2013 Revenue receipts
C) Capital receipts \u2013 Capital expenditure
D) None
Answer: A<\/strong><\/p>\n\n\n\n

10. Which of the following is NOT a fiscal policy tool?
<\/mark><\/strong>A) Government expenditure
B) Repo rate
C) Taxation
D) Borrowing
Answer: B<\/strong>
Explanation: Repo rate is a monetary policy tool.<\/p>\n\n\n\n

11.<\/mark><\/strong> Budgetary policy is the same as:
<\/mark><\/strong>A) Monetary policy
B) Fiscal policy
C) Trade policy
D) None
Answer: B<\/strong><\/p>\n\n\n\n

12. Disinvestment is a part of:
<\/mark><\/strong>A) Fiscal policy
B) Monetary policy
C) Foreign policy
D) Trade policy
Answer: A<\/strong><\/p>\n\n\n\n

13. \u201cDeficit financing\u201d means<\/mark><\/strong>:
A) Printing of new currency notes by RBI to meet deficit
B) Raising taxes
C) Increasing imports
D) Borrowing from foreign governments
Answer: A<\/strong><\/p>\n\n\n\n

14. A revenue deficit implies:<\/mark><\/strong>
A) Revenue expenditure > Revenue receipts
B) Capital expenditure > Capital receipts
C) Fiscal deficit \u2013 Primary deficit
D) None
Answer: A<\/strong><\/p>\n\n\n\n

15. Primary deficit = Fiscal deficit \u2013 ?<\/mark><\/strong>
A) Revenue deficit
B) Interest payments
C) Tax revenue
D) Borrowing
Answer: B<\/strong><\/p>\n\n\n\n

16. When government expenditure is greater than income, it leads to:
<\/mark><\/strong>A) Surplus budget
B) Balanced budget
C) Deficit budget
D) None
Answer: C<\/strong><\/p>\n\n\n\n

17. Which of the following budgets promotes economic equality?
<\/mark><\/strong>A) Surplus budget
B) Balanced budget
C) Deficit budget
D) Progressive taxation budget
Answer: D<\/strong><\/p>\n\n\n\n

18. <\/strong><\/mark>Fiscal consolidation refers to:
<\/mark><\/strong>A) Increasing fiscal deficit
B) Reducing fiscal deficit
C) Increasing revenue deficit
D) None
Answer: B<\/strong><\/p>\n\n\n\n

19.<\/mark><\/strong> The FRBM Act in India aims to:
<\/mark><\/strong>A) Control inflation
B) Reduce fiscal deficit and debt
C) Promote exports
D) Encourage FDI
Answer: B<\/strong><\/p>\n\n\n\n

20. Which of the following is a capital receipt?
<\/mark><\/strong>A) Corporate tax
B) Income tax
C) Disinvestment proceeds
D) Customs duty
Answer: C<\/strong><\/p>\n\n\n\n

21. An example of expansionary fiscal policy is:
<\/mark><\/strong>A) Increasing direct taxes
B) Increasing indirect taxes
C) Increasing public expenditure
D) Reducing subsidies
Answer: C<\/strong><\/p>\n\n\n\n

22.<\/mark><\/strong> Counter-cyclical fiscal policy means:
<\/mark><\/strong>A) Cutting expenditure in recession
B) Increasing taxes in depression
C) Moving against the economic cycle
D) None
Answer: C<\/strong>
Explanation: Govt spends more in recession and cuts spending in boom.<\/p>\n\n\n\n

23. In India, fiscal policy is presented through:
<\/mark><\/strong>A) RBI report
B) Union Budget
C) Finance Commission
D) NITI Aayog document
Answer: B<\/strong><\/p>\n\n\n\n

24. Which tax is progressive in nature?
<\/mark><\/strong>A) GST
B) Excise duty
C) Income tax
D) Customs duty
Answer: C<\/strong><\/p>\n\n\n\n

25.<\/mark><\/strong> Which type of taxation reduces income inequality?
<\/mark><\/strong>A) Proportional
B) Progressive
C) Regressive
D) Indirect
Answer: B<\/strong><\/p>\n\n\n\n

26. Which body recommends the distribution of financial resources between the Centre and the States in India?
<\/mark><\/strong>A) RBI
B) Finance Commission
C) NITI Aayog
D) Planning Commission
Answer: B<\/strong>
Explanation: The Finance Commission (Article 280) decides vertical & horizontal sharing of taxes.<\/p>\n\n\n\n

27. Which of the following is NOT a component of fiscal deficit?
<\/mark><\/strong>A) Government borrowing
B) Interest payments
C) Disinvestment proceeds
D) Government expenditure
Answer: C<\/strong>
Explanation: Fiscal deficit does not include disinvestment proceeds, which are capital receipts.<\/p>\n\n\n\n

28.<\/mark><\/strong> A high fiscal deficit usually leads to:
<\/mark><\/strong>A) Lower inflation
B) Higher inflation
C) Zero inflation
D) No effect
Answer: B<\/strong>
Explanation: Excessive deficit financing increases money supply \u2192 inflation.<\/p>\n\n\n\n

29.<\/mark><\/strong> Fiscal drag refers to:
<\/mark><\/strong>A) Automatic increase in tax revenue during economic growth
B) Fall in revenue deficit
C) Fall in fiscal deficit
D) None
Answer: A<\/strong>
Explanation: When income rises, progressive tax pulls more revenue automatically.<\/p>\n\n\n\n

30. Which of the following can reduce fiscal deficit?
<\/mark><\/strong>A) Higher subsidies
B) Higher public expenditure
C) Higher disinvestment receipts
D) Tax cuts
Answer: C<\/strong><\/p>\n\n\n\n

31.<\/mark><\/strong> Primary deficit excludes:
<\/mark><\/strong>A) Capital expenditure
B) Revenue receipts
C) Interest payments
D) Fiscal deficit
Answer: C<\/strong><\/p>\n\n\n\n

32. Which deficit indicates the gap between government\u2019s current income and expenditure?
<\/mark><\/strong>A) Revenue deficit
B) Fiscal deficit
C) Primary deficit
D) Budget deficit
Answer: A<\/strong><\/p>\n\n\n\n

33. Which of the following is considered inflationary financing?
<\/mark><\/strong>A) External borrowing
B) Printing of new currency
C) Higher FDI
D) Disinvestment
Answer: B<\/strong><\/p>\n\n\n\n

34. The concept of “Functional Finance” in fiscal policy was given by:
<\/mark><\/strong>A) Keynes
B) Abba Lerner
C) Milton Friedman
D) Adam Smith
Answer: B<\/strong>
Explanation: Lerner suggested govt should use fiscal policy for full employment, not just balanced budgets.<\/p>\n\n\n\n

35. <\/mark><\/strong>Which of the following statements is correct?
<\/strong><\/mark>A) Fiscal policy is more effective in a developing country
B) Monetary policy is more effective in a developing country
C) Both are equally effective
D) Neither is effective
Answer: A<\/strong>
Explanation: Fiscal policy directly impacts investment and development.<\/p>\n\n\n\n

36. The largest component of revenue expenditure in India is:
<\/mark><\/strong>A) Subsidies
B) Defense
C) Interest payments
D) Education
Answer: C<\/strong><\/p>\n\n\n\n

37. In India, the fiscal deficit target under FRBM Act (later amended) was originally:
<\/mark><\/strong>A) 1% of GDP
B) 3% of GDP
C) 5% of GDP
D) 6% of GDP
Answer: B<\/strong><\/p>\n\n\n\n

38.<\/mark><\/strong> \u201cTwin deficit problem\u201d refers to:
<\/mark><\/strong>A) Fiscal deficit and Current account deficit
B) Revenue deficit and Fiscal deficit
C) Primary deficit and Fiscal deficit
D) Fiscal deficit and Budget deficit
Answer: A<\/strong><\/p>\n\n\n\n

39. Crowding-out effect occurs when:
<\/mark><\/strong>A) Govt borrowing reduces private sector investment
B) Govt borrowing increases private investment
C) Govt reduces subsidies
D) None
Answer: A<\/strong><\/p>\n\n\n\n

40. Counter-cyclical fiscal policy in recession requires:
<\/mark><\/strong>A) Cutting govt expenditure
B) Increasing taxes
C) Increasing expenditure & cutting taxes
D) Printing less money
Answer: C<\/strong><\/p>\n\n\n\n

41. The type of budget where government expenditure = government receipts is called:
<\/mark><\/strong>A) Deficit budget
B) Surplus budget
C) Balanced budget
D) None
Answer: C<\/strong><\/p>\n\n\n\n

42. Which one of the following is NOT an objective of fiscal policy?
<\/mark><\/strong>A) Price stability
B) Full employment
C) Balanced regional development
D) Controlling foreign exchange rate directly
Answer: D<\/strong><\/p>\n\n\n\n

43. What is \u201cFiscal Federalism\u201d?
<\/mark><\/strong>A) Sharing of monetary policy between Centre and States
B) Sharing of fiscal powers between Centre and States
C) RBI\u2019s independence from govt
D) None
Answer: B<\/strong><\/p>\n\n\n\n

44.<\/strong><\/mark> The component of the budget which leads to asset creation is:
<\/mark><\/strong>A) Revenue expenditure
B) Revenue receipts
C) Capital expenditure
D) None
Answer: C<\/strong><\/p>\n\n\n\n

45. During inflation, which fiscal measure is suitable?
<\/mark><\/strong>A) Increase govt expenditure, reduce taxes
B) Reduce govt expenditure, increase taxes
C) Increase subsidies
D) Increase transfer payments
Answer: B<\/strong><\/p>\n\n\n\n

46.<\/mark><\/strong> In India, fiscal year is from:<\/mark><\/strong>
A) January to December
B) April to March
C) July to June
D) May to April
Answer: B<\/strong><\/p>\n\n\n\n

47. Which of the following is NOT a revenue receipt?
<\/mark><\/strong>A) Corporate tax
B) Income tax
C) Borrowings
D) GST
Answer: C<\/strong><\/p>\n\n\n\n

48. Fiscal deficit leads to:
<\/mark><\/strong>A) Fall in aggregate demand
B) Rise in aggregate demand
C) No change in demand
D) Fall in money supply
Answer: B<\/strong><\/p>\n\n\n\n

49. <\/strong><\/mark>Which of the following is an anti-recessionary fiscal policy measure?
<\/mark><\/strong>A) Reducing govt expenditure
B) Increasing indirect taxes
C) Increasing govt expenditure
D) Reducing subsidies
Answer: C<\/strong><\/p>\n\n\n\n

    \n
  1. <\/li>\n<\/ol>\n\n\n\n

    50. In India, \u201cZero-Base Budgeting\u201d was introduced first in:
    <\/mark><\/strong>A) 1969
    B) 1976
    C) 1985
    D) 1991
    Answer: B<\/strong>
    Explanation: Introduced by J. Chidambaram in the Department of Science & Technology in 1976. <\/strong><\/p>\n\n\n\n

    51. Monetary policy refers to:<\/mark><\/strong>
    A) Govt\u2019s spending and taxation decisions
    B) RBI\u2019s control over money supply and credit
    C) Foreign trade measures
    D) Industrial policy decisions
    Answer: B<\/strong>
    Explanation: In India, RBI formulates monetary policy to regulate liquidity, inflation, and credit supply.<\/p>\n\n\n\n

    52. Who formulates monetary policy in India?<\/strong>
    <\/mark>A) Ministry of Finance
    B) RBI
    C) SEBI
    D) NITI Aayog
    Answer: B<\/strong>
    Explanation: The Reserve Bank of India frames and implements monetary policy.<\/p>\n\n\n\n

    53. Monetary policy is announced by:
    <\/mark><\/strong>A) Finance Minister
    B) RBI Governor
    C) President
    D) Prime Minister
    Answer: B<\/strong>
    Explanation: RBI Governor announces the policy decisions of the Monetary Policy Committee.<\/p>\n\n\n\n

    54. The type of monetary policy used to control inflation is:<\/strong>
    <\/mark>A) Expansionary
    B) Contractionary
    C) Neutral
    D) None
    Answer: B<\/strong>
    Explanation: Contractionary (tight) policy reduces money supply to control rising prices.<\/p>\n\n\n\n

    55. The type of monetary policy used to fight recession is:
    <\/mark><\/strong>A) Contractionary
    B) Expansionary
    C) Neutral
    D) None
    Answer: B<\/strong>
    Explanation: Expansionary policy lowers interest rates and increases liquidity to boost demand.<\/p>\n\n\n\n

    56. Quantitative tools of monetary policy affect:
    <\/mark><\/strong>A) Credit to specific sectors
    B) Credit supply in the whole economy
    C) Only inflation
    D) None
    Answer: B<\/strong>
    Explanation: Quantitative tools (Repo, CRR, SLR, OMO) regulate overall liquidity.<\/p>\n\n\n\n

    57. Qualitative tools of monetary policy affect:
    <\/mark><\/strong>A) Volume of credit
    B) Direction of credit to specific uses
    C) Tax collection
    D) Subsidies
    Answer: B<\/strong>
    Explanation: Qualitative measures (credit rationing, margin requirements) channel credit to priority areas.<\/p>\n\n\n\n

    58. Repo rate means:
    <\/mark><\/strong>A) Rate at which banks lend to RBI
    B) Rate at which RBI lends to banks (short-term)
    C) Rate of return on govt bonds
    D) Reverse of bank rate
    Answer: B<\/strong>
    Explanation: Repo = repurchase option; RBI gives funds to banks against securities.<\/p>\n\n\n\n

    59 . Reverse Repo Rate means:
    <\/mark><\/strong>A) Rate at which banks lend to customers
    B) Rate at which RBI borrows from commercial banks
    C) Rate on deposits with banks
    D) None
    Answer: B<\/strong>
    Explanation: Reverse Repo absorbs liquidity from the system.<\/p>\n\n\n\n

    60. Bank Rate is:
    <\/mark><\/strong>A) Long-term lending rate by RBI to banks
    B) Repo + CRR
    C) Rate of savings account
    D) None
    Answer: A<\/strong>
    Explanation: Bank rate = rate at which RBI provides long-term funds to banks.<\/p>\n\n\n\n

    61. CRR (Cash Reserve Ratio) means:
    <\/mark><\/strong>A) % of deposits banks keep as cash with RBI
    B) % of deposits lent to priority sector
    C) Rate of interest on borrowings
    D) None
    Answer: A<\/strong>
    Explanation: CRR is a tool to control liquidity; kept in cash with RBI.<\/p>\n\n\n\n

    62. SLR (Statutory Liquidity Ratio) refers to:
    <\/mark><\/strong>A) % of deposits kept with RBI
    B) % of deposits invested in liquid assets like cash, gold, govt securities
    C) Ratio of loans to deposits
    D) None
    Answer: B<\/strong>
    Explanation: SLR ensures banks maintain a buffer in approved securities.<\/p>\n\n\n\n

    63. Open Market Operations (OMO) mean:
    <\/strong><\/mark>A) RBI buying & selling shares
    B) RBI buying & selling govt securities
    C) RBI buying & selling forex only
    D) None
    Answer: B<\/strong>
    Explanation: OMOs adjust liquidity in the system.<\/p>\n\n\n\n

    64. Which is a quantitative tool of monetary policy?
    <\/mark><\/strong>A) Repo rate
    B) Credit rationing
    C) Margin requirements
    D) Direct action
    Answer: A<\/strong>
    Explanation: Repo is a general (quantitative) liquidity control tool.<\/p>\n\n\n\n

    65. Which is a qualitative tool of monetary policy?<\/strong>
    <\/mark>A) CRR
    B) SLR
    C) Credit rationing
    D) OMO
    Answer: C<\/strong>
    Explanation: Qualitative tools guide credit to specific sectors.<\/p>\n\n\n\n

    66. Expansionary monetary policy will:<\/strong>
    <\/mark>A) Increase repo and CRR
    B) Decrease repo and CRR
    C) Increase taxation
    D) None
    Answer: B<\/strong>
    Explanation: Lower rates and reserves \u2192 more lending \u2192 more demand.<\/p>\n\n\n\n

    67. Tight monetary policy means:<\/strong>
    <\/mark>A) High interest rates, less liquidity
    B) Low interest rates, more liquidity
    C) Balanced budget
    D) None
    Answer: A<\/strong><\/p>\n\n\n\n

    68. The ultimate aim of monetary policy in India is:<\/strong>
    <\/mark>A) Control inflation and support growth
    B) Maximize exports
    C) Control unemployment only
    D) None
    Answer: A<\/strong><\/p>\n\n\n\n

    69. Liquidity Adjustment Facility (LAF) is operated through:<\/strong>
    <\/mark>A) Repo and Reverse Repo
    B) Bank Rate
    C) SLR
    D) CRR
    Answer: A<\/strong>
    Explanation: LAF = short-term liquidity adjustment tool via repo window.<\/p>\n\n\n\n

    70. MSF (Marginal Standing Facility) is:<\/strong>
    <\/mark>A) Public borrowing from govt
    B) Banks borrowing overnight from RBI at a higher rate than repo
    C) Corporates borrowing from RBI
    D) None
    Answer: B<\/strong><\/p>\n\n\n\n

    71. Monetary policy in India is reviewed by:<\/strong>
    <\/mark>A) Monetary Policy Committee (MPC)
    B) RBI Governor alone
    C) Finance Minister
    D) NITI Aayog
    Answer: A<\/strong>
    Explanation: Since 2016, MPC decides repo rate.<\/p>\n\n\n\n

    72. The MPC consists of:<\/strong>
    <\/mark>A) 3 members only
    B) 6 members (3 RBI + 3 Govt nominees)
    C) 5 members (all RBI)
    D) 4 members
    Answer: B<\/strong><\/p>\n\n\n\n

    73. Inflation target in India (till March 2026) is:<\/strong>
    <\/mark>A) 2% \u00b1 1%
    B) 4% \u00b1 2%
    C) 6% \u00b1 3%
    D) 5% \u00b1 1%
    Answer: B<\/strong>
    Explanation: Flexible target band = 2%\u20136% with 4% midpoint.<\/p>\n\n\n\n

    74. Who decides the repo rate in India?<\/strong>
    <\/mark>A) RBI Governor
    B) Finance Minister
    C) Monetary Policy Committee (MPC)
    D) Prime Minister
    Answer: C<\/strong><\/p>\n\n\n\n

    75. Which institution controls monetary policy in India?<\/strong>
    <\/mark>A) Finance Commission
    B) Ministry of Finance
    C) Reserve Bank of India
    D) NITI Aayog
    Answer: C<\/strong>
    Explanation: RBI manages monetary policy under RBI Act, 1934.<\/p>\n\n\n\n

    76. Fiscal policy in India is presented annually in:<\/strong>
    <\/mark>A) RBI Bulletin
    B) Union Budget
    C) Five-Year Plan
    D) Economic Survey
    Answer: B<\/strong>
    Explanation: Fiscal policy decisions are reflected in the Union Budget.<\/p>\n\n\n\n

    77. Who presents the Union Budget in Parliament?<\/strong>
    <\/mark>A) RBI Governor
    B) Finance Minister
    C) Prime Minister
    D) President
    Answer: B<\/strong><\/p>\n\n\n\n

    78. The Economic Survey is published by:<\/strong>
    <\/mark>A) RBI
    B) Ministry of Finance
    C) SEBI
    D) NITI Aayog
    Answer: B<\/strong>
    Explanation: It provides analysis of economic performance before the Union Budget.<\/p>\n\n\n\n

    79. Which is NOT a fiscal policy instrument?<\/strong>
    <\/mark>A) Subsidies
    B) Taxation
    C) Repo rate
    D) Public expenditure
    Answer: C<\/strong>
    Explanation: Repo rate is a monetary tool.<\/p>\n\n\n\n

    80. Which committee recommended inflation targeting in India?<\/strong>
    <\/mark>A) Narasimham Committee
    B) Urjit Patel Committee
    C) Rangarajan Committee
    D) Kelkar Committee
    Answer: B<\/strong><\/p>\n\n\n\n

    81. The flexible inflation targeting framework was adopted in India in:<\/strong>
    <\/mark>A) 2014
    B) 2015
    C) 2016
    D) 2017
    Answer: C<\/strong><\/p>\n\n\n\n

    82. The current inflation target band in India is:
    <\/mark><\/strong>A) 2\u20134%
    B) 2\u20136%
    C) 3\u20137%
    D) 1\u20135%
    Answer: B<\/strong><\/p>\n\n\n\n

    83. The Fiscal Responsibility and Budget Management (FRBM) Act was passed in:
    <\/strong><\/mark>A) 1991
    B) 1998
    C) 2003
    D) 2008
    Answer: C<\/strong><\/p>\n\n\n\n

    84. The main aim of the FRBM Act is:
    <\/mark><\/strong>A) Control inflation
    B) Reduce fiscal deficit & government debt
    C) Increase tax rates
    D) Encourage exports
    Answer: B<\/strong><\/p>\n\n\n\n

    85. Which of the following is an expansionary monetary policy measure?
    <\/mark><\/strong>A) Increasing repo rate
    B) Reducing repo rate
    C) Increasing CRR
    D) Increasing SLR
    Answer: B<\/strong><\/p>\n\n\n\n

    86. In India, \u201cWays and Means Advances (WMA)\u201d is related to:<\/strong>
    <\/mark>A) Short-term borrowing by govt from RBI
    B) Long-term borrowing from IMF
    C) Credit to industries
    D) None
    Answer: A<\/strong><\/p>\n\n\n\n

    87. In case of inflation, the suitable policy mix is:
    <\/mark><\/strong>A) Expansionary fiscal + Expansionary monetary
    B) Contractionary fiscal + Contractionary monetary
    C) Expansionary fiscal + Tight monetary
    D) None
    Answer: B<\/strong><\/p>\n\n\n\n

    88. \u201cTwin deficit problem\u201d refers to:
    <\/mark><\/strong>A) Fiscal deficit + Revenue deficit
    B) Fiscal deficit + Current account deficit
    C) Fiscal deficit + Primary deficit
    D) Budget deficit + Trade deficit
    Answer: B<\/strong><\/p>\n\n\n\n

    89. Which year was India\u2019s fiscal deficit the highest in recent times due to COVID-19?
    <\/mark><\/strong>A) 2018\u201319
    B) 2019\u201320
    C) 2020\u201321
    D) 2021\u201322
    Answer: C<\/strong>
    Explanation: Fiscal deficit touched ~9.2% of GDP in 2020\u201321.<\/p>\n\n\n\n

    90. Who chairs the Monetary Policy Committee (MPC)?
    <\/mark><\/strong>A) Finance Minister
    B) RBI Governor
    C) Prime Minister
    D) Chief Economic Advisor
    Answer: B<\/strong><\/p>\n\n\n\n

    91. Which instrument directly controls inflation?
    <\/mark><\/strong>A) Repo rate
    B) GST
    C) Import duties
    D) Disinvestment
    Answer: A<\/strong><\/p>\n\n\n\n

    92. Fiscal policy that reduces taxes and increases govt spending is known as:
    <\/mark><\/strong>A) Neutral policy
    B) Expansionary policy
    C) Contractionary policy
    D) None
    Answer: B<\/strong><\/p>\n\n\n\n

    93. The government\u2019s largest revenue source in India (2023\u201324) is:
    <\/mark><\/strong>A) Non-tax revenue
    B) Borrowings
    C) GST
    D) Corporate tax
    Answer: C<\/strong>
    Explanation: GST has overtaken corporate tax as the largest revenue source.<\/p>\n\n\n\n

    94. Which instrument is used by RBI to absorb excess liquidity?
    <\/mark><\/strong>A) Repo
    B) Reverse Repo
    C) CRR reduction
    D) Deficit financing
    Answer: B<\/strong><\/p>\n\n\n\n

    95. A \u201csurplus budget\u201d is usually adopted when:<\/strong>
    <\/mark>A) Inflation is high
    B) Deflation exists
    C) Unemployment rises
    D) None
    Answer: A<\/strong><\/p>\n\n\n\n

    96. Who decides the inflation target in India?
    <\/mark><\/strong>A) RBI alone
    B) Finance Ministry in consultation with RBI
    C) Parliament
    D) NITI Aayog
    Answer: B<\/strong><\/p>\n\n\n\n

    97. Which tax is considered a counter-cyclical tool of fiscal policy?
    <\/mark><\/strong>A) Income tax (progressive tax)
    B) GST
    C) Customs duty
    D) Corporate tax (flat rate)
    Answer: A<\/strong>
    Explanation: Progressive tax automatically reduces inequality and stabilizes demand.<\/p>\n\n\n\n

    98. In India, fiscal policy is more effective than monetary policy because:
    <\/mark><\/strong>A) Tax and spending affect growth directly
    B) RBI is not independent
    C) Foreign sector is large
    D) None
    Answer: A<\/strong><\/p>\n\n\n\n

    99. Which is the correct policy mix for recession?<\/mark><\/strong>
    A) Expansionary fiscal + Expansionary monetary
    B) Contractionary fiscal + Tight monetary
    C) Expansionary fiscal + Tight monetary
    D) Contractionary fiscal + Expansionary monetary
    Answer: A<\/strong>
    Explanation: In recession, govt must spend more and RBI must increase liquidity.<\/p>\n\n\n\n

    100. The main objectives of monetary policy in India are:
    <\/mark><\/strong>A) Price stability
    B) Economic growth
    C) Employment generation
    D) All of the above
    Answer: D<\/strong>
    Explanation: RBI\u2019s monetary policy has multiple goals \u2013 stability, growth, employment, and financial stability.<\/p>\n","protected":false},"excerpt":{"rendered":"

    1. Fiscal policy refers to:A) Money supply controlB) Government\u2019s revenue and expenditure decisionsC) Credit regulationD) Foreign trade policyAnswer: BExplanation: Fiscal policy uses taxation and spending to influence the economy. 2. Who formulates fiscal policy in India?A) RBIB) SEBIC) Ministry of FinanceD) NITI AayogAnswer: CExplanation: The Finance Ministry prepares fiscal policy through budgetary measures. 3. The<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"[]"},"categories":[15],"tags":[19894,19976,20373,19699,19884,19889,19926,20027,20371,20368,19893,20401,20377,20383,20379,19276,20415,20414,19296,20365,20394,19405,19307,19253,20380,20369,20366,20399,20411,20392,19700,19299,20388,19851,19606,11096,20406,20400,20384,20363,20391,20404,20405,19711,20408,20395,19704,20410,20381,19615,19937,20378,19918,19945,20396,20412,4029,5649,19313,20389,20387,19605,20407,20397,20386,20372,19958,20402,20403,20376,19961,19879,19880,20393,20398,20364,20367,20409,20385,19608,19714,20390,19723,19713,20374,19887,19897,20413,19913,19900,19881,19702,19901,19899,20382,19792,20375,20370,19898],"class_list":{"0":"post-13420","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-economics","7":"tag-bank-rate","8":"tag-banking-sector","9":"tag-budget-and-fiscal-policy","10":"tag-budgetary-policies","11":"tag-capital-market","12":"tag-cash-reserve-ratio-crr","13":"tag-central-bank-functions","14":"tag-competitive-exam-mcqs","15":"tag-contractionary-fiscal-policy","16":"tag-contractionary-monetary-policy","17":"tag-credit-control","18":"tag-credit-market","19":"tag-deficit-financing","20":"tag-deflation-control","21":"tag-demand-management","22":"tag-economic-growth","23":"tag-economic-growth-strategies","24":"tag-economic-management","25":"tag-economic-planning","26":"tag-economic-policy","27":"tag-economic-stability","28":"tag-economics-mcqs-with-answers","29":"tag-economics-mcqs-with-explanation","30":"tag-economics-study-material","31":"tag-employment-generation","32":"tag-expansionary-fiscal-policy","33":"tag-expansionary-monetary-policy","34":"tag-financial-system","35":"tag-fiscal-and-monetary-analysis","36":"tag-fiscal-and-monetary-coordination","37":"tag-fiscal-deficit","38":"tag-fiscal-policy","39":"tag-fiscal-policy-and-employment","40":"tag-fiscal-policy-and-gdp","41":"tag-fiscal-policy-and-inflation","42":"tag-fiscal-policy-and-monetary-policy-top-100-mcqs-with-answer-and-explanation","43":"tag-fiscal-policy-awareness","44":"tag-fiscal-policy-exam-questions","45":"tag-fiscal-policy-impact-on-economy","46":"tag-fiscal-policy-in-india","47":"tag-fiscal-policy-mcqs","48":"tag-fiscal-policy-trends","49":"tag-fiscal-reforms","50":"tag-government-borrowing","51":"tag-government-expenditure-management","52":"tag-government-finance","53":"tag-government-spending","54":"tag-indian-economy-policies","55":"tag-inflation-control","56":"tag-inflation-targeting","57":"tag-interest-rate-policy","58":"tag-investment-promotion","59":"tag-liquidity-adjustment-facility","60":"tag-liquidity-management","61":"tag-macro-economic-policy","62":"tag-macroeconomic-stability","63":"tag-mcqs-adda","64":"tag-mcqs-for-pc-psi-sda-fda-pdo-vao-banking-kas-ias-ssc-gd-ssc-chsl-ssc-cgl-for-all-compitative-exams","65":"tag-monetary-policy","66":"tag-monetary-policy-and-employment","67":"tag-monetary-policy-and-gdp","68":"tag-monetary-policy-and-inflation","69":"tag-monetary-policy-awareness","70":"tag-monetary-policy-exam-questions","71":"tag-monetary-policy-impact-on-economy","72":"tag-monetary-policy-in-india","73":"tag-monetary-policy-mcqs","74":"tag-monetary-policy-trends","75":"tag-monetary-reforms","76":"tag-monetary-tools","77":"tag-monetary-transmission-mechanism","78":"tag-money-market","79":"tag-money-supply","80":"tag-objective-questions-on-fiscal-policy","81":"tag-objective-questions-on-monetary-policy","82":"tag-objectives-of-fiscal-policy","83":"tag-objectives-of-monetary-policy","84":"tag-policy-implementation-in-india","85":"tag-poverty-alleviation","86":"tag-price-stability","87":"tag-primary-deficit","88":"tag-public-debt-management","89":"tag-public-expenditure","90":"tag-public-finance","91":"tag-public-revenue","92":"tag-qualitative-monetary-policy","93":"tag-quantitative-monetary-policy","94":"tag-rbi-regulations","95":"tag-repo-and-reverse-repo-operations","96":"tag-repo-rate","97":"tag-reserve-bank-of-india-rbi","98":"tag-revenue-deficit","99":"tag-reverse-repo-rate","100":"tag-statutory-liquidity-ratio-slr","101":"tag-supply-management","102":"tag-tax-policy","103":"tag-taxation-policy","104":"tag-types-of-fiscal-policy","105":"tag-types-of-monetary-policy"},"_links":{"self":[{"href":"https:\/\/mcqsadda.com\/index.php\/wp-json\/wp\/v2\/posts\/13420","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mcqsadda.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mcqsadda.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mcqsadda.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mcqsadda.com\/index.php\/wp-json\/wp\/v2\/comments?post=13420"}],"version-history":[{"count":3,"href":"https:\/\/mcqsadda.com\/index.php\/wp-json\/wp\/v2\/posts\/13420\/revisions"}],"predecessor-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