introduction to indian economy section 6 MCQ Questions & Answers Detailed Explanation

Answer: (b)

Answer: (d)

The definition of deficit financing is likely to vary with the purpose for which such a definition is needed.

In one sense by deficit financing we mean the excess of government expenditure over its normal receipts raised by taxes, fees, and other sources. In this definition such expenditure whether obtained through borrowing or from the banking system measures the budget deficit. Deficit financing is said to have been used whenever government expenditure exceeds its receipts. In under-developed countries deficit financing may be in two forms:

1. Difference between overall revenue receipts and expenditure
2. Deficit financing may be equal to borrowing from the banking system of the country.

Answer: (b)

Answer: (d)

In the Fifth Five-Year Plan (1974–1979), stress was by laid on employment, poverty alleviation, and justice. The plan also focused on self-reliance in agricultural production and defence.

For achieving economic self-reliance, the Plan aimed at elimination of special forms of external assistance, particularly food and fertilizer imports.

Answer: (c)

When the government expenditure exceeds revenues, the government is having a budget deficit. Thus the budget deficit is the excess of government expenditures over government receipts (income).

When the government is running a deficit, it is spending more than its receipts. Budgetary Deficit is the difference between all receipts and expenditures of the government, both revenue and capital.

This difference is met by the net addition of the treasury bills issued by the RBI and the drawing down of cash balances kept with the RBI. So when it is estimated, drawing down of cash balances is excluded.

Answer: (c)

Branch banking implies engaging in banking activities such as accepting deposits or making loans at facilities away from a bank's home office. It means a system of banking in which a banking organization works in more than one place. The main place of business is called head office and other places of business are called branches.

The head office controls and coordinates the work at branches. This system of banking is prevalent throughout the world. In India also, all the major banks have been operating under a branch banking system.