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

Answer: (b)

The Government of India started the Oil Seeds Production programme in 1986 to harness the best of production, processing and management technologies to accelerate self-reliance in oilseeds and vegetable oils.

The programme was designed to supplement the efforts of the state governments to increase the production and productivity of groundnut, rapeseed/ mustard, soybean, sunflower, Sesamum, castor, safflower, linseed and Niger grown in the states.

Answer: (d)

The sixth five-year plan had long-term objectives of removal of poverty and the achievement of self-reliance.

It also aimed at the achievement of economic and technological self-reliance with the help of modernisation.

Answer: (c)

Marginal Standing Facility (MSF) is the rate at which scheduled banks could borrow funds overnight from the Reserve Bank of India (RBI) against approved government securities.

Banks can borrow funds through MSF during acute cash shortages (considerable shortfall of liquidity). This measure has been introduced by RBI to regulate short-term asset-liability mismatch more effectively and the borrowing is within Statutory liquidity requirements.

The Marginal Standing Facility (MSF) is pegged 100bps or 1 % above the Repo Rate.

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)

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: (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.