Q. Which of the following statements is/are correct about “Tobin tax”?
1. It is a tax imposes on all foreign exchange transactions.
2. It is not implemented anywhere in the world till now.
Select the correct answer using the codes given below:

[A] 1 only

[B] 2 only

[C] Both 1 and 2

[D] Neither 1 nor 2

Answer: C

It is a proposal of imposing small tax on all foreign exchange transactions with the objective to discourage destabilizing speculation and volatility in the foreign exchange markets. 

Proposed by the Nobel prize-winning economist James Tobin (1918– 2002), the tax has never been implemented anywhere in the world so far. 

Source: Ramesh Singh