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

Answer: (c)

When a government’s total expenditure exceeds the revenue that it generates (excluding money from borrowings).

Deficit differs from debt, which is an accumulation of yearly deficits. A fiscal deficit is regarded by some as a positive economic event.

Answer: (a)

In terms of Section 22 of the Reserve Bank of India Act, the RBI has been given the statutory function of note issue on a monopoly basis. The note issue in India was originally based upon the “Proportional Reserve System”. When it became difficult to maintain the re-serve proportionately, it was replaced by the “Minimum Reserve System “.

According to the RBI Amendment Act of 1957, the bank should now maintain a minimum reserve of Rs.200 crore worth of gold coins, gold bullion and foreign securities of which the value of gold coin and bullion should be not less than Rs.115 crore.

Answer: (d)

In 1976, Government of India launched a plan scheme called “Economic Census and Surveys”. In 1977 Central Statistical Organisation conducted First economic census in collaboration with the Directorate of Economics & Statistics (DES) in the States/Union Territories. Current Economic Census is Sixth Economic Census held in 2013.

The Central Statistics Office (CSO) in the Ministry of Statistics and Programme Implementation (MOSPI) conducted the Sixth Economic Census during January, 2013 to April, 2014 in collaboration with Directorates of Economics and Statistics in all the States and Union Territories.

Answer: (c)

Himayat is a training-cum-placement programme for unemployed youth in Jammu and Kashmir. Under the program, the youth of the state will be provided short-term training for at least 3 months, in a range of skills for which there is good market demand.

The scheme aims to train 1,00,000 youth in 5 years and provide at least 75% of them with jobs.

Answer: (d)

The income approach equates the total output of a nation to the total factor income received by residents or citizens of the nation.

The main types of factor income are:

1. Employee compensation (cost of fringe benefits, including unemployment, health, and retirement benefits);
2. Interest received net of interest paid;
3. Rental income (mainly for the use of real estate) net of expenses of landlords; and
4. Royalties paid for the use of intellectual property and extractable natural resources.

All remaining value-added generated by firms is called the residual or profit. If a firm has stockholders, they own the residual, some of which they receive as dividends.

Profit includes the income of the entrepreneur - the businessman who combines factor inputs to produce a good or service.

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.