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Basics of Economics: NBSE Class 10 Financial Literacy notes
Here, you will find summaries, questions, answers, textbook solutions, pdf, extras, MCQs etc. of (Nagaland Board) NBSE Class 10 Financial Literacy Chapter 5: Basics of Economics. These solutions, however, should be only treated as references and can be modified/changed.
Summary
A persistent rise in prices is called inflation. It refers to an increase in the general level of prices in an economy over a period of time. When the price of one particular product increases, it will not be considered as inflation even though there is an increase in price. If the prices of most goods have gone up, it is known as inflation. When general levels of prices fall over a period of time, it is known as deflation.
In India, inflation is being calculated by using the Wholesale Price Index (WPI). WPI is the index that is used to measure the change in the average price level of goods traded in the wholesale market. The Indian government has taken WPI as an indicator of the rate of inflation in the economy.
There are several reasons why inflation occurs. The general law states that the change in price is due to change in demand and supply of goods and services. However, other reasons causing changes in price are an increase in the supply of money, increase in population, low level of production, increase in salary, increase in the price of oil and raw materials, increase in tax rate for goods and services, expectation of future rise in price, increase in loans given by banks, and the presence of black money.
Inflation can be classified under two main heads: cost-push inflation and demand-pull inflation. The effects of inflation include hindering the economic development of a country due to fewer savings and less investment by people, discouraging investors from investing in a country with high inflation, employees demanding more salary which results in more money supply, people with fixed income being able to buy fewer goods and services than before, and stimulating speculation and hoarding.
The Goods and Services Tax (GST) has revolutionized the Indian taxation system. The GST Act was passed in the Lok Sabha on 29th March 2017 and came into effect from 1st July 2017. GST is a single tax on the supply of goods and services. GST is a comprehensive, multi-stage, destination-based tax that will be levied on every value addition. That means, GST will be levied on value additions at each stage of the production cycle – buying raw materials, processing, manufacturing, warehousing, and sale to customers. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.
There are around 160 countries in the world that have GST in place. GST is a destination-based taxed where the tax is collected by the State where goods are consumed. India has adopted the Dual GST model in which both States and Central levies GST on Goods or Services or both. The Goods and Services Tax will be levied on each of these stages, which makes it a multi-stage tax.
There are four slabs under GST for both goods and services; they are 5%, 12%, 18%, and 28%. In addition, several items face zero levy. Luxury and sin goods that are in the top bracket will also attract a cess that will be used to compensate states for revenue loss.
GST has replaced Central Excise Law, Service Tax Law, VAT, Entry Tax, Octroi, and others. GST aims at eliminating double taxation, cascading, multiplicity of taxes, etc. Earlier the VAT rates used to differ from State to State. GST has brought a uniform tax system.
Textual questions and answers (MCQs)
1. A persistent rise in prices is called ______
Answer: (b) Inflation
2. GST is levied on
Answer: (c) Both a & b.
3. Which of the following Tax was abolished by GST ______
Answer: (a) Service Tax
4. There are around ______ countries in the world that have GST in place.
Answer: (c) 160
5. IGST is charged by ______ Government.
Answer: (b) Central
Extra/additional MCQs
Q.1 A persistent rise in prices is called?
A. Deflation B. Inflation C. Stagflation D. Hyperinflation
Answer: B. Inflation
Q.2 When general levels of prices fall over a period of time, it is known as?
A. Inflation B. Deflation C. Stagflation D. Hyperinflation
Answer: B. Deflation
Q.3 In India, inflation is calculated by using?
A. Consumer Price Index B. Wholesale Price Index C. Retail Price Index D. Producer Price Index
Answer: B. Wholesale Price Index
Q.4 Cost push inflation is caused due to?
A. Increase in demand B. Increase in supply C. Increase in cost of products D. Decrease in cost of products
Answer: C. Increase in cost of products
Q.5 Demand Pull inflation is caused due to?
A. Increase in demand B. Increase in supply C. Decrease in demand D. Decrease in supply
Answer: A. Increase in demand
Q.6 Goods and Services Tax (GST) came into effect from?
A. 1st April, 2017 B. 1st July, 2017 C. 1st January, 2017 D. 1st October, 2017
Answer: B. 1st July, 2017
Q.7 GST is a single tax on the supply of?
A. Goods only B. Services only C. Goods and Services D. None of the above
Answer: C. Goods and Services
Q.8 India has adopted the?
A. Single GST model B. Dual GST model C. Triple GST model D. Quadruple GST model
Answer: B. Dual GST model
Q.9 State GST is collected by the?
A. State Government B. Central Government C. Both State and Central Government D. None of the above
Answer: A. State Government
Q.10 Central GST is collected by the?
A. State Government B. Central Government C. Both State and Central Government D. None of the above
Answer: B. Central Government
Q.11 Integrated GST is collected by the?
A. State Government B. Central Government C. Both State and Central Government D. None of the above
Answer: B. Central Government
Q.12 GST replaced? A. Central Excise Law B. Service Tax Law C. VAT D. All of the above
Answer: D. All of the above
Q.13 The tax is collected by the state where goods are?
A. Produced B. Consumed C. Exported D. Imported
Answer: B. Consumed
Q.14 In a supply chain, GST is levied at each?
A. Value subtraction B. Value addition C. Value multiplication D. Value division
Answer: B. Value addition
Q.15 Goods and Services Tax avoids?
A. Cascading effect B. Multiplicity of taxes C. Double taxation D. All of the above
Answer: D. All of the above
Q.16 GST has brought a?
A. Uniform tax system B. Different tax system C. Complex tax system D. Simplified tax system
Answer: A. Uniform tax system
Q.17 An example of a stage in a multi-stage tax is?
A. Purchase of raw materials B. Final sale to customer C. Processing D. All of the above
Answer: D. All of the above
Q.18 GST is levied on value additions at each stage of the?
A. Production cycle B. Consumption cycle C. Distribution cycle D. Investment cycle
Answer: A. Production cycle
Q.19 The final consumer will bear only the GST charged by the?
A. First dealer B. Second dealer C. Last dealer D. All dealers
Answer: C. Last dealer
Q.20 Tax is calculated only on the?
A. Value addition B. Value subtraction C. Value multiplication D. Value division
Answer: A. Value addition
Q21. GST will be levied on these value additions i.e., the monetary worth added at each stage to achieve the final sale to the _______.
A. Manufacturer B. Retailer C. End customer D. Supplier
Answer: C. End customer
Q22. In the case of goods manufactured in West Bengal and sold to the final consumer in Nagaland, the entire tax revenue will go to _______.
A. West Bengal B. Nagaland C. Both states D. Central government
Answer: B. Nagaland
Q23. There are _____ slabs under GST for both goods and services.
A. Two B. Three C. Four D. Five
Answer: C. Four
Q24. Luxury and sin goods attract a _______ in addition to the top bracket.
A. Subsidy B. Rebate C. Cess D. Discount
Answer: C. Cess
Q25. Apparel below ₹1000 falls under which GST slab?
A. 5% B. 12% C. 18% D. 28%
Answer: B. 12%
Q26. Which of the following is NOT a benefit of GST?
A. Elimination of multiplicity of taxes B. Reduction in prices of goods & services C. Distinction between Goods & Services D. Input Tax Credit available across goods and services
Answer: C. Distinction between Goods & Services
Q27. Input Tax Credit is available across goods and services at every stage of _______.
A. Production B. Supply C. Consumption D. Distribution
Answer: B. Supply
Q28. Which of these is NOT a keyword related to GST?
A. SGST B. CGST C. IGST D. VAT
Answer: D. VAT
Q29. State GST is collected by the _______.
A. State government B. Central government C. Local government D. Tax authority
Answer: A. State government
Q30. Central GST is collected by the _______.
A. State government B. Central government C. Local government D. Tax authority
Answer: B. Central government
Q31. Integrated GST is collected by the _______.
A. State government B. Central government C. Local government D. Tax authority
Answer: B. Central government
Q32. Footwear below ₹500 falls under which GST slab?
A. 5% B. 12% C. 18% D. 28%
Answer: B. 12%
Q33. Vacuum cleaners fall under which GST slab?
A. 5% B. 12% C. 18% D. 28%
Answer: D. 28%
Q34. Umbrellas fall under which GST slab?
A. 5% B. 12% C. 18% D. 28%
Answer: B. 12%
Q35. Biscuits fall under which GST slab?
A. 5% B. 12% C. 18% D. 28%
Answer: C. 18%
Q36. Jute falls under which GST slab?
A. 0% B. 5% C. 12% D. 18%
Answer: A. 0%
Q37. Mineral water falls under which GST slab?
A. 5% B. 12% C. 18% D. 28%
Answer: C. 18%
Q38. Motor vehicles fall under which category?
A. 5% GST B. 12% GST C. 18% GST D. Luxury & Sin goods
Answer: D. Luxury & Sin goods
Q39. Which of these is exempt from GST?
A. Vacuum cleaners B. Salt C. Mineral water D. Motor vehicles
Answer: B. Salt
Q40. Which of these items is taxed at 5% GST?
A. Mobile phones B. Cheese C. Electric motors D. Khadi purchased from Khadi and Village Industries stores
Answer: D. Khadi purchased from Khadi and Village Industries stores
Q41. Which of these items is taxed at 18% GST?
A. Mobile phones B. Butter C. Sewing machine D. Washing machine
Answer: A. Mobile phones
Q42. Which of these items is taxed at 28% GST?
A. Deodorants B. Tooth powder C. Ketchup & Sauces D. Spectacles
Answer: A. Deodorants
Q43. Which of these items is taxed at 12% GST?
A. Exercise books and note books B. Camera C. Steel products D. Speakers
Answer: A. Exercise books and note books
Q44. GST is a comprehensive, multi-stage, _______-based tax that will be levied on every value addition.
A. Production B. Consumption C. Distribution D. Import
Answer: B. Consumption
Q45. GST has replaced Central Excise Law, Service Tax Law, VAT, Entry Tax, Octroi, and _______.
A. Property tax B. Income tax C. Professional tax D. Others
Answer: D. Others
Q46. Which of the following falls under the 0% GST slab?
A. Bread B. Butter C. Cheese D. Ghee
Answer: A. Bread
Q47. What is the GST slab for butter, cheese, and ghee?
A. 5% B. 12% C. 18% D. 28%
Answer: B. 12%
Q48. Which of the following falls under the 18% GST slab?
A. Cashew nut B. Insulin C. Cornflakes D. Apparel above ₹1000
Answer: C. Cornflakes
Q49. The GST levied on mineral water falls under which slab?
A. 5% B. 12% C. 18% D. 28%
Answer: C. 18%
Q50. The GST levied on footwear costing more than ₹500 falls under which slab?
A. 5% B. 12% C. 18% D. 28%
Answer: C. 18%
