introduction to indian economy section 1 MCQ Questions & Answers Detailed Explanation

Answer: (a)

Gross Domestic Product (GDP) is a measure of the total value of the goods and services produced in a country during one year, excluding income from investment abroad by residents of the country. It is the Gross National Product less net income from property or investment abroad.

Answer: (a)

A mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies.

The basic idea of the mixed economy is that the means of production are mainly under private ownership; that markets remain the dominant form of economic coordination; and that profit-seeking enterprises and the accumulation of capital remain the fundamental driving force behind economic activity.

However, unlike a free-market economy, the government would wield considerable indirect influence over the economy through fiscal and monetary policies.

Answer: (c)

Credit control is the most important function of the Reserve Bank of India.  By using credit control methods RBI tries to maintain monetary stability.

There are two types of methods:

1. Quantitative control to regulate the volume of total credit; and
2. Qualitative Control to regulate the flow of credit.

Answer: (b)

The Eleventh Finance Commission of India was appointed by the President on July 3, 1998 for the period 2000-05. It was chaired by Prof. A.M. Khusro and its members were Shri N.C Jain, Shri J.C Jetly, Dr. Amaresh Bagchi, and T.N. Srivastava.

Note : The Finance Commission came into existence in 1951. It was established under Article 280 of the Indian Constitution by the President of India. The chairman of 14th and current finance commission is former RBI governor Y.V.Reddy.

Answer: (c)

Under Section 22 of the Reserve Bank of India Act, the Bank has the sole right to issue banknotes of all denominations.

The distribution of one rupee notes and coins and small coins all over the country is undertaken by the Reserve Bank as an agent of the Government. The system as it exists today is known as the minimum reserve system.

Answer: (d)

The total of national income measures the flow of goods and services in an economy.

The increasing population of India hinders the growth and progress of country.

The National Commission on Population was constituted on May 11, 2000 under the Chairmanship of the Prime Minister Shri Atal Bihari Vajpayee to provide overall guidance for population stabilisation by promoting synergy between demographic, educational, environmental and development programmes.