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

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)

While the Reserve Bank of India (RBI) has the authority to issue banknotes of denominational values of Rs.2, Rs.5, Rs.10, Rs.20, Rs.50, Rs.100, Rs.500, Rs.1,000, Rs.5,000 and Rs.10,000, the one rupee note was printed and issued by the central government.

The Government of India also has the sole right to mint coins of all denominations.

Answer: (c)

When development in the economy takes place, the share of the tertiary sector in national income keeps on increasing because the tertiary sector is involved in services within and outside the country.

With development the disposable income of individuals income results in the growth of banking, trading, communication etc., both domestically and internationally.

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.