introduction to indian economy section 5 MCQ Questions & Answers Detailed Explanation

Answer: (a)

At present, the index is being developed only for the residential housing sector.

However, at a later stage, the index could be expanded to develop separate indices for commercial property and land. Primary data on housing prices is being collected from real estate agents by commissioning the services of private consultancy/research organisations of national repute.

In addition, data on housing prices is also being collected from the housing finance companies and banks, which is based on housing loans contracted by these institutions.

Answer: (a)

Open Market Operations (OMOs) are the market operations conducted by the Reserve Bank of India by way of sale/ purchase of Government securities to/ from the market with an objective to adjust the rupee liquidity conditions in the market on a durable basis.

When the RBI feels there is excess liquidity in the market, it resorts to the sale of securities thereby sucking out the rupee liquidity.

Similarly, when the liquidity conditions are tight, the RBI will buy securities from the market, thereby releasing liquidity into the market.

The two traditional types of OMO’s used by RBI are:

1. Outright purchase (PEMO): Is outright buying or selling of government securities; and
2. Repurchase agreement (REPO): This is the short term, and are subject to repurchase.

Answer: (b)

Coal mines is not an example of economic overheads. Economic overhead is a capital investment into the infrastructure which should encourage new industrial growth and social well being.

The other three schools, sanitary facilities and roads and railways are economic overheads.

Answer: (b)

The Finance Commission of India came into existence in 1951. It was established under Article 280 of the Indian Constitution by the President of India.

It was formed to define the financial relations between the centre and the state. The Constitution of India has made several provisions to bridge the gap of finances between the Centre and the States.

These include various articles in the constitution like Article 268, which facilitates a levy of duties by the Centre but equips the states to collect and retain the same.

Similarly, there are Articles 269, 270, 275, 282 and 293 all of which specify ways and means of sharing resources between Union and States. Apart from the above-mentioned provisions, The Indian Constitution provides an institutional framework to facilitate Centre-State TransfeRs.This body is the Finance Commission

Answer: (c)

Answer: (b)

The State Bank of India, the largest banking and financial services company in India by revenue, assets and market capitalization; traces its ancestry to British India, through the Imperial Bank of India, to the founding in 1806 of the Bank of Calcutta, making it the oldest commercial bank in the Indian Subcontinent.

Bank of Madras merged into the other two presidency banks—Bank of Calcutta and Bank of Bombay—to form the Imperial Bank of India, which in turn became the State Bank of India.

The Government of India nationalized the Imperial Bank of India in 1955, with the Reserve Bank of India taking a 60% stake, and renamed it the State Bank of India