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

Answer: (b)

GDP is defined as the value of all final goods and services produced in an economy in a year.

The total quantity of goods produced in an economy during the year is multiplied by their current prices to get the GDP.

Answer: (c)

Deficit financing is a pragmatic tool of economic development and has been used by Indian govt. to obtain necessary resources to finance the five year plans.

Answer: (c)

Money market helps in securing short-term loans to meet working capital requirements through the system of finance bills, commercial papers, etc. it plays crucial role in financing both internal as well as international trade.

Answer: (d)

According to the 2016-17 budget, Borrowings and other liabilities contribute a maximum of about 21% of total government earnings. It is followed by Corporation Tax (19%) and Income Tax (14%).

Corporation tax and income tax together constitute one-third of the total government earnings.

Answer: (c)

The Industrial Development Bank of India (IDBI) was established in 1964 by the government of India under an act of the Indian Parliament called the IDBI Act.

On December 15, 2003, the Indian Parliament approved the conversion of the Industrial Development Bank of India’s (IDBI) into a universal bank. The government’s move was significant given the fact that the Development Financial Institution (DFI) had been struggling to sustain its growth in recent times.

In India, the Development Financial Institutions were established and developed by the Government of India and Reserve Bank of India (RBI) to meet the specific needs of the industry and were traditionally engaged in long term financing, as their main objective was to take care of the investment needs of industries and to contribute to a better industrial climate.

Answer: (a)