Government Intervention in Resource Allocation
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Questions and Answers

What is the main purpose of the Competition Act in India?

  • To promote competition and prevent anti-competitive activities (correct)
  • To regulate the distribution of income and wealth
  • To enforce minimum wage laws
  • To control the location of industries

    • Why does the government intervene in the distribution of income and wealth?

  • To ensure a more socially optimal distribution (correct)
  • To increase individual savings
  • To encourage market monopolies
  • To promote unequal distribution

    • What is the redistributive function of the budget related to?

  • Government subsidies
  • Market demand
  • Tax evasion
  • Income and wealth distribution among individuals (correct)

    • Which statement best describes the role of governments in economic growth?

    <p>Governments can influence resource allocation through regulatory activities</p> Signup and view all the answers

    What ideology emphasized equality and created pressure on governments to redistribute wealth?

    <p>Socialism</p> Signup and view all the answers

    How does the government ensure a more socially optimal distribution of income?

    <p>By intervening in the market through regulations</p> Signup and view all the answers

    In what ways can governments redistribute income and wealth?

    <p>Through expenditure or revenue side of the budget</p> Signup and view all the answers

    Which factor leads to government intervention in economic activities according to the text?

    <p>Skewed distribution if left to the market forces</p> Signup and view all the answers

    What is the primary responsibility of the Finance Commission in India?

    <p>Recommending sharing of taxes between the union and state governments</p> Signup and view all the answers

    Which statement accurately describes one of the functions of the Finance Commission?

    <p>Determining principles for grants-in-aid to states in need</p> Signup and view all the answers

    How does the Finance Commission contribute to maintaining fiscal federalism in India?

    <p>By recommending principles for the distribution of taxes among states</p> Signup and view all the answers

    What is a key aspect of the Finance Commission's role according to the text?

    <p>Recommending measures to enhance state consolidation funds</p> Signup and view all the answers

    Which function is NOT performed by the Finance Commission in India?

    <p>Allocating all tax revenues directly to the union government</p> Signup and view all the answers

    What distinguishes the role of the Finance Commission in India from other bodies?

    <p>Institutional mechanism for facilitating resource transfers</p> Signup and view all the answers

    In what way does the Finance Commission impact resource allocation in India?

    <p>By recommending principles for tax revenue sharing</p> Signup and view all the answers

    Which statement best describes the Finance Commission's involvement in enhancing local governance?

    <p>Recommending measures to supplement resources for local bodies</p> Signup and view all the answers

    What makes the Finance Commission a critical component of fiscal federalism in India?

    <p>Determination of tax distribution principles among states</p> Signup and view all the answers

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