introduction to indian economy section 9 MCQ Questions & Answers Detailed Explanation

Answer: (d)

Since 1957, the Reserve Bank of India is required to maintain gold and foreign exchange reserves of Rs.200 crore, of which at least Rs.115 crore should be in gold and Rs.85 crore in the form of Government Securities. The system as it exists today is known as the minimum reserve system.

Answer: (b)

The rate at which RBI gives short term loans to commercial banks against securities is known as the Repo rate. A reduction in the repo rate helps banks to get money at a cheaper rate.

When the repo rate increases, borrowing from the central bank becomes more expensive. In contrast, the reverse repo rate is the rate at which banks can park surplus funds with RBI.

Answer: (c)

In India a large number of farmers are illiterate and know little about scientific agriculture, prices of primary products are lower than those of manufactured products and Investment in agriculture has been lower when compared to investment in the industry.

All these reasons are responsible for lower rural income.

Answer: (a)

Entertainment tax is an indirect tax that is levied by the State Governments in India. it is levied on every financial transaction that is related to entertainment such as movie tickets, major commercial shows and big private festivals.

Some other forms of entertainment that are included in the purview of entertainment taxes :

1. Amusement parks
2. Video games
3. Arcades
4. Exhibitions
5. Celebrity stage shows
6. Sports activities

Answer: (c)

Personal income- direct taxes + fees+ fines+ social security contribution by employers. The amount of money that households have available for spending and saving after income taxes have been accounted for.

Disposable personal income is often monitored as one of the many key economic indicators used to gauge the overall state of the economy. Disposable income is total personal income minus personal current taxes.

Answer: (d)

Damodar Valley Corporation is a thermal and hydropower generating public organization of India. It emerged as a culmination of attempts made over a whole century to control the wild and erratic Damodar River.

By April 1947, a full agreement was practically reached between the three Governments of Central, Bengal and Bihar on the implementation of the scheme and in March 1948, the Damodar Valley Corporation Act (Act No. XIV of 1948) was passed by the Central Legislature, requiring the three governments – the Central Government and the State Governments of West Bengal and Bihar (now Jharkhand) to participate jointly for the purpose of building the Damodar Valley Corporation.

The Corporation came into existence on 7 July 1948 as the first multipurpose river valley project and the first Public Sector Corporation of independent India.