introduction to indian economy section 4 MCQ Questions & Answers Detailed Explanation
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The following question based on Introduction to Indian Economy topic of indian economy mcq
(a) Lending decreases
(b) Savings increases
(c) Cost of production increases
(d) Return on capital increases
The correct answers to the above question in:
Answer: (d)
Interest rates are the main determinant of investment on a macroeconomic scale. The current thought is that if interest rates increase across the board, then investment decreases, causing a fall in national income.
However, the Austrian School of Economics sees higher rates as leading to greater investment in order to earn the interest to pay the depositors.
Higher rates encourage more saving and thus more investment and thus more jobs to increase production to increase profits. Higher rates also discourage economically unproductive lending such as consumer credit and mortgage lending.
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Read more introduction Based Indian Economy Questions and Answers
Question : 1
Which one of the following organisations is a financial institution ?
a) IFCO
b) KVIC
c) SEBI
d) ICICI
Answer »Answer: (d)
ICICI (Industrial Credit and Investment Corporation of India) Bank is an Indian multinational banking and financial services company headquartered in Mumbai, Maharashtra.
It is the largest private sector bank and overall the second largest bank in India after State Bank of India.
Question : 2
Which among the following subjects is not an aim of the monetary policy of the Reserve Bank of India ?
a) Direct credit with objective criteria
b) Giving impetus to economic development
c) To control pressure of inflation
d) To ensure social justice.
Answer »Answer: (d)
The Reserve Bank of India is the main monetary authority of the country and besides that, the central bank acts as the bank of the national and state governments.
It formulates, implements and monitors the monetary policy as well as has to ensure an adequate flow of credit to productive sectors.
Objectives are maintaining price stability and ensuring adequate flow of credit to productive sectors.
Question : 3
Which among the following sector of Indian Economy is maximum dependent on economic developments in advanced rations?
a) Mining sector
b) Manufacturing sector
c) Agricultural sector
d) Services sector
Answer »Answer: (d)
Question : 4
Consider the following statements :
- NTPC has diversified to the hydropower sector
- Power Grid Corporation has diversified into the telecom sector.
a) Only b
b) Only a
c) Both of a and b
d) None of a and b
Answer »Answer: (c)
NTPC Limited is the largest Indian state-owned electric utilities company based in New Delhi, India.
NTPC’s core business is engineering, construction and operation of power generating plants and providing consultancy to power utilities in India and abroad.
The name of the Company “National Thermal Power Corporation Limited” was changed to “NTPC Limited” with effect from 28 October 2005. The primary reason for this was the company’s foray into hydro and nuclear-based power generation along with backward integration by coal mining.
The Power Grid Corporation of India is an Indian state-owned electric utility company headquartered in Gurgaon, India. Power Grid wheels about 50% of the total power generated in India on its transmission network.
Power Grid has also diversified into the Telecom business and established a telecom network of more than 25,000 km across the country.
Question : 5
The process of curing inflation by reducing money supply is called
a) Down–pull inflation
b) Reflation
c) Disinflation
d) Cost-push inflation
Answer »Answer: (c)
The process of curing inflation by reducing money supply is called disinflation. Disinflation is a decrease in the rate of inflation – a slowdown in the rate of increase of the price level of goods and services in GDP. Disinflation occurs when the increase in the “consumer price level” slows down from the previous period when the prices were rising.
Question : 6
Which of the following statements are not correct about ‘bond’ ?
- It is an instrument of raising long-term capital.
- Bond-issuing body pays interest on it which is known as ‘contango rate’.
- It may be issued by governments and private companies both.
- ‘Bonds’ and ‘debantures’ are different in nature.
a) Neither of the above
b) 2 only
c) 1 and 3 only
d) All are true
Answer »Answer: (b)
The interest paid on bonds is known as ‘coupon’ or ‘coupon rate’. Bonds and debentures both are the instruments of raising long-term capital but while the former is supported by collateral in the former is supported by collateral in the form of immovable property, the latter are not.
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introduction to indian economy section 14
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