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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?

Governments can influence resource allocation through regulatory activities (A) Signup and view all the answers

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

Socialism (D) Signup and view all the answers

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

By intervening in the market through regulations (B) Signup and view all the answers

In what ways can governments redistribute income and wealth?

Through expenditure or revenue side of the budget (D) Signup and view all the answers

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

Skewed distribution if left to the market forces (D) Signup and view all the answers

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

Recommending sharing of taxes between the union and state governments (A) Signup and view all the answers

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

Determining principles for grants-in-aid to states in need (A) Signup and view all the answers

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

By recommending principles for the distribution of taxes among states (C) Signup and view all the answers

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

Recommending measures to enhance state consolidation funds (B) Signup and view all the answers

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

Allocating all tax revenues directly to the union government (A) Signup and view all the answers

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

Institutional mechanism for facilitating resource transfers (A) Signup and view all the answers

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

By recommending principles for tax revenue sharing (C) Signup and view all the answers

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

Recommending measures to supplement resources for local bodies (D) Signup and view all the answers

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

Determination of tax distribution principles among states (A) Signup and view all the answers

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