introduction to indian economy section 7 MCQ Questions & Answers Detailed Explanation

Answer: (c)

Open Market Operations (OMO) is the buying and selling of government securities in the open market in order to expand or contract the amount of money in the banking system.

Purchases inject money into the banking system and stimulate growth while sales of securities do the opposite.

Answer: (d)

A scheduled bank, in India, refers to a bank that is listed in the 2ndSchedule of the Reserve Bank of India Act, 1934.

Banks not under this Schedule are called non-scheduled banks. Scheduled banks are usually private, foreign, and nationalized banks operating in India.

Answer: (d)

Statutory Liquidity Ratio refers to the amount that the commercial banks require to maintain in the form of gold or government approved securities before providing credit to the customers.

An increase in SLR practically restricts lending, thus controlling credit in the country. In India, the RBI can increase the Statutory Liquidity Ratio to contain inflation, suck liquidity in the market, to tighten the measure to safeguard the customers’ money.

Answer: (d)

The Tenth Finance Commission was incorporated in the year 1995 consisting of Shri Krishna Chandra Pant as the Chairman. The operational duration of the Commission was 1995-2000.

Note : The chairman of 14th and current finance commission is former RBI governor Y.V.Reddy.

Answer: (b)

Disguised unemployment exists where part of the labour force is either left without work or is working in a redundant manner where worker productivity is essentially zero.

It is unemployment that does not affect aggregate output. When more people are engaged in a job than actually required, a state of disguised unemployment is created.

Disguised, or hidden, unemployment is primarily found in the agricultural and the unorganized sectors of rural India.

Answer: (d)

Foreign-exchange reserves are assets held by central banks and monetary authorities, usually in different reserve currencies, mostly the United States dollar.

However, the term in popular usage commonly also adds gold reserves, special drawing rights (SDRs), and International Monetary Fund (IMF) reserve positions.