introduction to indian economy section 4 MCQ Questions & Answers Detailed Explanation

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.

Answer: (d)

Answer: (c)

In India, a planned economy is based on the socialist system in which all have equal opportunities to education, healthcare, non-exploitation, equality of wealth etc.

The concept was borrowed from Russia and is based on achieving directive principles mentioned in our constitution.

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.

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.

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.