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

Answer: (a)

Factors responsible for this are given below:

1. The boost to demand given by monetary and fiscal stimulus following the crisis was large. Final consumption grew at an average of over 8% annually between 2009-10 and 2011-12. The result was strong inflation and a powerful monetary response that also slowed consumption demand.
2. Beginning in 2011-12 corporate and infrastructure investments started slowing both as a result of investment bottlenecks as well as the tighter monetary policy.

Answer: (a)

The independent review committee headed by Dr P. Rama Rao was set up to review the functioning of the Defence Research and Development Organisation (DRDO).

The following recommendations of the committee were accepted by the government:

1. Nomination of nodal officers for structured interaction between DRDO and Services;
2. Integrated Financial Advice Scheme for financial decentralization; etc.

Answer: (c)

Originally, the assets of the Issue Department were to consist of not less than two-fifths of gold coin, gold bullion or sterling securities provided the amount of gold was not less than Rs.40 crore in value.

The remaining three-fifths of the assets might be held in rupee coins, Government of India rupee securities, eligible bills of exchange and promissory notes payable in India.

Due to the exigencies of the Second World War and the post-war period, these provisions were considerably modified.

Since 1957, the Reserve Bank of India is required to maintain gold and foreign exchange reserves of Rs.200 crore (2 billion), of which at least Rs.115 crore should be in gold and Rs.85 crore in the form of Government Securities. The system as it exists today is known as the minimum reserve system.

Answer: (d)

By merging the two erstwhile wage employment programme - National Rural Employment Programme (NREP) and Rural Landless Employment Guarantee Programme (RLEGP) the Jawahar Rozgar Yojana (JRY) was started with effect from April 1, 1989, on an 80:20 cost-sharing basis between the centre and the States.

The main objective of the Yojana was additional gainful employment for the unemployed and under-employed persons in rural areas. The other objective was the creation of sustained employment by strengthening rural economic infrastructure and assets in favour of rural poor for their direct and continuing benefits.

Answer: (b)

Cash Reserve Ratio (CRR) is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the central bank.

An increase in CRR means that banks have fewer funds available and money is sucked out of circulation; on the contrary, reduction in CRR leads to credit creation. CRR is used by RBI to control liquidity in the banking system.

Answer: (d)

Megacities of India have more than 5 million population. But not all the major megacities are located on the sea coast or are sea ports. Delhi, which is the national capital is not a sea port.