QUESTION SET 1

QUESTION SET -1

1.              GNP at market prices—Indirect taxes+subsidies is referred to as :

(1)            GNP  at factor cost                                     (2)       GDP  at  factor cost

          (3)       NNP  at factor cost                                      (4)       NDP at factor  cost

ANSWER-1

EXPLANATION: for converting market price to factory cost we need to deduct indirect taxes and subsidies as Gross national product at factor cost is defined as the value of all final goods and services at market price produced within the produced within the domestic territory of the country in an accounting year including net factor income from abroad minus net indirect taxes and adding subsidies.

2.              EDI system got legal recognition under whick one of the following Acts ?

(1)            Electronics Act, 1996                                 (2)       Right to Data Act, 1998

         (3)       DGFT Act, 1999                                        (4)       Information Technology                                                                                                              Act, 2000

ANSWER-4

EXPLANATION: The Information Technology Act,2000 which provides the legal infrastructure for E-commerce in India.The object of The Information Technology Act, 2000 as defined therein is as to provide legal recognition to electronic records in INDIA.

3.           Following statements are related to futures contracts. Choose the statements that are not

true :

(a)           Purchase of a futures contract is called short position.

         (b)          Currency futures are traded on an exchange in standardized form and in fixed             quantity.

(c)           Default risk in futures contract is high compared to forward contract.

            Codes :-

(1)            only (a) and (b)                                            (2)         only (a) and (c)   (3)       (a), (b) and (c)                                              (4)       only (b)

ANSWER-2

EXPLANATION:Buying a future contract is called a  long position and default risk in future contract is low as compared to forward as this contracts are traded in standardized exchanges.

4.              Match the items of List - z with items of List - zz and choose the correct code 

List - z                                           Listzz

(a)           Carroll Model                                     (i)        International trade

          (b)          Corlett  - Hague Rule                         (ii)       Interest rate

(c)           Hecksher Ohlin Theorem                  (iii)     Principles of taxation

(d)          Knut  Wick sell’s Theory                   (iv)      Social responsibility of business

           codes:-

            (a)       (b)       (c)       (d)

(1)            (iv)     (iii)     (i)        (ii)

(2)            (iii)     (ii)       (i)        (iv)

(3)            (iii)     (i)        (ii)      (iv)

(4)            (ii)       (iii)     (i)        (iv)

ANSWER-1

EXPLANATION:-(a)Carroll model deals with corporate social responsibilities as a four-layered pyramid model and called it the pyramid of responsibilities. The four different responsibilities - economical, legal, ethical and philanthropic are the layers of the pyramid.

(b)corlett -hague rule deals with theory of  optimum taxation.

(c)  Hecksher Ohlin Theorem It states that a country will export goods that use its abundant factors intensively, and import goods that use its scarce factors intensively

(d)    Knut  Wick sell’s Theory -invented the key term natural rate of interest and defined it at that interest rate which is compatible with a stable price level.^[If the interest rate falls short of the natural rate, inflation is likely to arise; if the interest rate exceeds the natural rate, this will tend to produce deflation. An interest rate that coincides with the natural rate ensures equilibrium in the commodity market and produces price level stability. 

5.              Labour Rate of Pay Variance can be calculated by which one of the following equations ?

(1)            Budgeted Labour Costs—Actual Labour Costs

(2)            (Standard Hours—Actual Hours)×Actual Wage Rate

(3)            (Standard Wage Rate—Actual Wage Rate)×Actual Hours Worked

(4)            (Standard Wage Rate—Actual Wage Rate)×Standard Hours Worked

ANSWER-3

EXPLANATION:It is that portion of the labour cost variance which arises due to the difference between the standard rate specified and the actual rate paid.

                     Rate of Pay Variance = Actual Time Taken (Standard Rate –                               Actual  Rate).