BBA 1st Year Business Environment FEMA Very Short Question Answer : BBA Business Communication Important Question With Answers Notes based on Latest Syllabus 2019. These Question answers covers Role of government in regulation, and development of bussiness, monetary and fiscal policy, EXIM policy, FEMA. Foreign Exchange Management Act is act relating to foreign exchange with the objective of facilitating external trade.
Foreign Exchange Management Act (Very Short Answer Question
Here we go for BBA Business Environment Very Short Question Answers related to
Role of government in regulation, and development of bussiness, monetary and fiscal policy, EXIM policy, FEMA .
Q. 1. Define monetary policy.
Ans. Monetary policy is a policy authorizing cëtra1 banks to control the supply of money as an instriiPnent of achieving the objectives of general economic policy.
Q. 2. Give any three limitations of monetary policy. Ans. (a) The time lag.
(b) Problem in forecasting.
(c) Under development of money and capital markets. Q. 3. Define fiscal policy.
Ans. Fiscal policy may be defined as government programme of taxation, expenditure and other financial operations to achieve certain national goals.
Q. 4. What do you mean by revenue budget?
Ans. The revenue budget deals with the receipts of revenue, which includes receipts from taxes, interest receipts and dividends and profits and revenue ‘eenditure which is mainly on administration.
Q. 5. Describe “Tax policy reform” (1991).
Ans. In India tax system grows with tax evasion; tax evaders continue to thrive and inequality in taxation continued to widen.
The tax reform committee appointed in 1991 examined the direct and indirect structure and suggested measures as follows:
(a) Improve the elasticity of tax revenue.
(b) Make tax system fairer and more broad based.
(c) Remove anomalies to rationalise direct tax system.
(d) Improve equity and sustain economic incentives.
(e) Identify new areas for taxation.
(fJ Improve compliance of direct taxes and strengthen enforcement.
Q. 6. Mention certain measures which will help to reduce fiscal deficit.
Ans. In this context of the Indian economy, the following measures can be undertaken to reduce fiscal deficit:
- Reduction in expenditure on major subsidies such as food, fertilizers, exports.
- (b) Reduction in the huge sum of money spent by the government on LIC bonus leave encashment, etc.
- Reduction in fresh recruitment of government staff along with abolition of large number of higher posts.
- Curtailment of unnecessary expenditure in government department.
Q. 7. Describe the nature of monetary policy.
Ans. Monetary policy gives a platform or a base to announce the rules and regulations or norms for the RBI governed bodies as banks FIPs, non-banking finance companies, primary dealers in money markets. Monetary policy is announced twice a year—one for the slack season (April-September)—one for the busy season (October-March) in accordance with agricultural cycles. This cycle coincides with half of the financial year. But in spite of this, the share of non-food credit in total credit has gone up, the share of agricultural credit coming down. The monetary policy will be an annual affair, this was decided by RBI. The policy aims at adequate financing of economic growth and at the same time, ensuring reasonable price stability.
Q. 8. Give the strengths of RBI’s monetary policy.
Ans. The balance sheet of monetary policy brings out some of the strengths of RBI’s monetary policy these are:
(a) Decision-making and implementation is faster than fiscal policy.
(b) More Reliance is paid on selective credit control measure and less on quantitative controls making RBI’s pressure less on commercial banks.
(c) Monetary policy has been responsive to the needs of economy.
Q. 9. “Change in lending margins is one of measures of SCC”. Give the explanation.
Ans. The qualitative or selective credit control is not always desirable or intended by the policy makers. Their impact is uniform on all the sectors of the economy.
The “Change in Lending Margin” has the following effects:
(a) Banks provide loans upto a certain percentage of the value of the mortgaged property.
(b) “Lending Margin” is the difference between the value of the mortgaged property and amount advanced.
(c) The RBI by increasing the lending margin could curb this kind of speculative borrowing.
(d) This method is not very much in use in India.
Q. 10. Give some weaknesses of RH I’s monetary policy.
Ans. The weaknesses of RBI’s monetary policy are as follows:
- Higher proportion of non-banking credit.
- No check on price rise.
- High currency deposit ration rendering the RBI’s role less effective.
- Selective applications of credit constraints.
- Defective statistical and monitoring system.
- Growing fiscal needs of the economy.
Q. 11. Write down any three objectives of monetary policy.
Ans. (a) Neutrality of money, money is only a technical device.
(b) Exchange rate stability by using interest rate mechanism.
(c) Promotion of economic growth by raising financial resources.
Q. 12. Define bank rate policy.
Ans. Bank rate is the, standard rate at which the bank is prepared to buy bills of exchange or other commercial papers, eligible to purchase under this act.
Q. 13. What do you mean by direct controls?
Ans. Where all methods are ineffective, the monetary authorities resort to direct control measures. The measures are resorted to when the commercial do not follows the instructions issued by the central bank.
Q. 14. Write down any four monetary policy tools.
Or Explain any three objectives of monetary policy
Ans. (a) monetary base
(b) Discount window lending.
(c) Bank rate policy.
(d) Variable cash reserve ratio.
Q. 15. What are the main objectives of fiscal policy?
Ans. (a) Full employment.
(b) Economic stabilization.
(c) Economic growth.
(d) Social justice or. Equality in distribution of income and wealth
Q. 16. What is progressive taxation?
Ans. It is suggested that progressive taxation should be levied on saved income of the people rather than on income, which is to be spent.
Q. 17. Write down any two importance of the budget.
Ans. (a) Effect in improvement of production in the private sector in accordance with the national priorities
(b) Effective in the improvement of the income distribution.
Q. 18. What is deficit budgeting?
Ans. The government should follow a policy of deficit budget in order to fight depression and unemployment, wherein expenditure of the government exceeds its revenue.
Q. 19. What is budget?
Ans. Budget means an estimate of revenue and expenditure.
Q. 20. Explain credit control.
Ans. Credit control is the system used by a business to make certain that it gives credit only to customers who are able to pay, and that customers pay on time.