Question

Consider the following statements with respect to Tobin Tax :

1.Tobin Tax is imposed on long term capital currency transactions.
2.Tobin Tax helps to reduce volatility in the markets.

Select the correct options from below :

• A. Both 1 and 2
• B. 1 only
• C. 2 only
• D. Neither 1 and 2

Answer 1

The correct option is C 2 only

<!--td {border: 1px solid #ccc;}br {mso-data-placement:same-cell;}--> The Tobin Tax, named after Nobel Prize-winning US economist James Tobin, was proposed in 1971 with the intention to levy it on short-term capital currency transactions.Tobin tax acts as a tool to discourage speculative currency trading and reduce exchange rate volatility.The Securities Transaction Tax applicable on stock market transactions is a similar tax intended to discourage short-term investments. Tobin’s idea was influenced by the earlier work of John Maynard Keynes on general financial transaction taxes.