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

Answer: (c)

The Foreign Exchange Management Act, 1999 (FEMA) is an Act of the Parliament of India “to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India”.

It was passed in the winter session of Parliament in 1999, replacing the Foreign Exchange Regulation Act (FERA).

Answer: (c)

Indian Oil Corporation Limited is the largest commercial undertaking and India’s No.1 Company in Fortune the magazine’s prestigious listing of the world’s 500 largest Corporations, ranked 98 for the year 2011 based on fiscal 2010 performance.

Answer: (b)

Devaluation of currency leads to all of the above-given aspects.

Devaluation leads to a country’s exports become less expensive as the currency is deliberately adjusted down to other currencies, making imports more expensive, making domestic consumers less likely to purchase them thus the domestic companies are encouraged to substitute imports.

Answer: (b)

NNP at factor cost is equivalent to national income. Net National Product at factor cost is the aggregate payments made to the factors of production.

NNP at FC is the total incomes earned by all the factors of production in the form of wages, profits, rent, interest etc. plus net factor income from abroad.

Similarly, National income is the sum total of wages, rent, interest, and profit earned by the factors of production of a country in a year. Thus it is the aggregate values of goods and services rendered during a given period counted without duplication.

Answer: (d)

The Reserve Bank of India (RBI) is known as the Lender of Last Resort. This is because when a commercial bank faces a financial crisis and fails to obtain funds from other sources, then the central bank provides them with financial assistance in the form of credit.

This role of the central bank saves the commercial bank from bankruptcy. Thus, the RBI plays the role of guarantor for commercial banks and maintains a sound banking system in the economy.

Answer: (b)

Coins may be coined at the Mint for issue under the authority of the Central Government, (of such denominations not higher than one hundred rupees), of such dimensions and designs, and of such metals or of mixed metals of such composition as the Central Government may, by notification in the Official Gazette, determine.) Paper Currency in India consists of notes of various denominations which are issued by the RBI and the Government of India.

The one rupee note is issued by the Ministry of Finance and bears the signature of the secretary. All currency notes are legal tender.