introduction to indian economy section 1 MCQ Questions & Answers Detailed Explanation

Answer: (b)

Inflation is an increase in the prices of commodities. It is caused due to decrease in supply and an increase in demand for commodities.

So when the money supply in the economy increases it means people have more purchasing capacity and thus demand increases which result in inflation.

Answer: (d)

Inflation is a persistent increase in the general price level of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value.

High inflation means the excessive supply of money and thus leads to a rise in the cost of credit and interest rates. Higher inflation leads to a reduction in economic growth, a decrease in the cost of credit, increase in spending rather than saving as the value of money is declining.

Answer: (c)

The Securities and Exchange Board of India (frequently abbreviated SEBI) is the regulator for the securities market in India.

SEBI has to be responsive to the needs of three groups, which constitute the market:

1. the issuers of securities;
2. the investors; and
3. the market intermediaries.

It is entrusted with regulating the business in stock exchanges and any other securities markets;

1. registering and regulating the working of stockbrokers,
2. sub-brokers,
3. share transfer agents,
4. bankers to an issue,
5. trustees of trust deeds,
6. registrars to an issue,
7. merchant bankers,
8. underwriters,
9. portfolio managers,
10. investment advisers and
11. such other intermediaries who may be associated with securities markets in any manner; registering and regulating the working of [venture capital funds and collective investment schemes], including mutual funds; etc.

Answer: (d)

The time period of Fourth Five Year Plan was 1969- 1974. Three annual plans preceded it.

Answer: (d)

National Bank for Agriculture and Rural Development (NABARD) was established on 12 July 1982 by a special act by the parliament and its main focus was to uplift rural India by increasing the credit flow for elevation of agriculture & rural non-farm sector.

It has been accredited with “matters concerning policy, planning and operations in the field of credit for agriculture and other economic activities in rural areas in India”.

Answer: (b)

Per capita income or average income or income per person is the mean income within an economic aggregate, such as a country or city.

It is calculated by taking a measure of all sources of income in the aggregate (such as GDP or Gross National Income) and dividing it by the total population.