SSC CGL (Combined Graduate Level) General Studies - Finance and Economics (Tier II Paper III) Flashcards

24 sample cards from the General Studies - Finance and Economics (Tier II Paper III) deck

Sampled from the end of the deck, so these are different cards from the ones shown on the syllabus page.

1. Define Depreciation.

   Depreciation is the gradual, permanent reduction in the value of a fixed asset due to use, wear and tear, obsolescence, or passage of time. It is a non-cash expense charged against profit.

2. How is depreciation calculated under the Straight Line Method (SLM)?

   Annual Depreciation = (Cost of Asset - Scrap/Residual Value) / Useful Life. A fixed equal amount is charged each year, so book value can reach zero (or scrap value).

3. How does the Written Down Value (Diminishing Balance) Method differ from SLM?

   In the WDV method depreciation is charged at a fixed percentage on the reducing book value each year, so the depreciation amount decreases yearly and the asset value never becomes zero. In SLM the amount is constant each year.

4. Who appoints the Comptroller and Auditor General (CAG) of India and under which Article?

   The CAG is appointed by the President of India under Article 148 of the Constitution.

5. What is the term and removal procedure for the CAG of India?

   The CAG holds office for 6 years or until the age of 65, whichever is earlier. The CAG can be removed only in the same manner and on the same grounds as a Supreme Court judge (by Parliament for proved misbehaviour or incapacity).

6. State the main function of the Comptroller and Auditor General of India.

   To audit the accounts of the Union and State governments and all public sector bodies, and to ensure public money is spent legally and properly. The CAG submits audit reports to the President/Governor, who lays them before Parliament/Legislature.

7. Which Articles deal with the duties and powers of the CAG, and to which committee are its reports linked?

   Articles 149 to 151 deal with the CAG's duties, powers, and audit reports. The CAG's reports are examined mainly by the Public Accounts Committee (PAC) of Parliament. The CAG is often called the 'Guardian of the Public Purse'.

8. Under which Article is the Finance Commission of India constituted, and who appoints it?

   The Finance Commission is constituted under Article 280 of the Constitution. It is appointed by the President of India every fifth year or earlier.

9. What is the composition of the Finance Commission?

   It consists of a Chairman and four other members appointed by the President. They hold office for the period specified in the President's order.

10. State the primary function of the Finance Commission.

    To recommend the distribution of net proceeds of taxes between the Centre and the States (vertical) and among the States (horizontal), and to recommend the principles governing grants-in-aid to States from the Consolidated Fund of India.

11. State the Law of Demand.

    Other things remaining constant, the quantity demanded of a commodity rises when its price falls and falls when its price rises, i.e., there is an inverse relationship between price and quantity demanded. The demand curve slopes downward from left to right.

12. State the Law of Supply.

    Other things remaining constant, the quantity supplied of a commodity rises with a rise in its price and falls with a fall in its price, i.e., a direct/positive relationship. The supply curve slopes upward from left to right.

13. Define Price Elasticity of Demand and give its formula.

    It measures the responsiveness of quantity demanded to a change in price. Ed = (% change in Quantity Demanded) / (% change in Price). The value is generally negative due to the inverse relationship.

14. What are Giffen goods and how do they violate the Law of Demand?

    Giffen goods are inferior goods for which demand rises as price rises (and falls as price falls), giving an upward-sloping demand curve. The strong negative income effect outweighs the substitution effect, violating the Law of Demand.

15. State the Law of Diminishing Marginal Utility.

    As a consumer consumes more units of a commodity, the additional (marginal) utility derived from each successive unit goes on decreasing, other things remaining constant.

16. Differentiate between Fixed Cost and Variable Cost.

    Fixed costs do not vary with the level of output and exist even at zero output (e.g., rent, salaries). Variable costs change directly with output (e.g., raw materials, wages). Total Cost = Fixed Cost + Variable Cost.

17. State the Law of Variable Proportions (Law of Diminishing Returns).

    As more units of a variable factor are added to fixed factors, total product first increases at an increasing rate, then at a diminishing rate, and finally declines. Its three stages are increasing returns, diminishing returns, and negative returns.

18. List the main features of Perfect Competition.

    Large number of buyers and sellers, homogeneous product, free entry and exit of firms, perfect knowledge, no transport cost, and a single ruling price. The firm is a price-taker and its demand curve is perfectly elastic (horizontal).

19. Define Monopoly and state its key features.

    A market with a single seller of a product having no close substitutes. Features: barriers to entry, the seller is a price-maker, and the firm faces a downward-sloping demand curve. Price is determined by the firm itself.

20. What is Monopolistic Competition?

    A market with many sellers offering differentiated (close but not identical) products, with free entry and exit and selling/advertising costs. Each firm has some control over its price; example: toothpaste or soap brands.

21. What is the condition for a firm's equilibrium (profit maximization) in any market?

    A firm is in equilibrium where Marginal Cost = Marginal Revenue (MC = MR) and MC cuts MR from below. At this point profit is maximized.

22. Define National Income (and GDP).

    National Income is the total money value of all final goods and services produced by the normal residents of a country in an accounting year. GDP (Gross Domestic Product) is the total market value of all final goods and services produced within the domestic territory of a country in a year.

23. Distinguish between GDP, GNP, NNP, and National Income (NNP at Factor Cost), including key formulas.

    GNP = GDP + Net Factor Income from Abroad. NNP = GNP - Depreciation. National Income = NNP at Factor Cost = NNP at Market Price - Indirect Taxes + Subsidies. The three methods of measuring national income are the Product (Value Added), Income, and Expenditure methods.

24. What are the functions of money and the main measures of money supply (M1 to M4) in India?

    Functions: medium of exchange, measure/unit of value, store of value, and standard of deferred payments. RBI measures money supply as M1 (currency + demand deposits + other deposits with RBI), M2 = M1 + savings deposits with post office, M3 = M1 + time deposits with banks (broad money), and M4 = M3 + total post office deposits.

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General Studies - Finance and Economics (Tier II Paper III) flashcards FAQ