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The following question based on Introduction to Indian Economy topic of indian economy mcq
(a) Taxation
(b) Consumption
(c) Inflation
(d) Money supply
The correct answers to the above question in:
Answer: (b)
Fiscal policy is the use of government revenue collection (taxation) and expenditure (spending) to influence the economy.
The two main instruments of fiscal policy are changes in the level and composition of taxation and government spending in various sectors.
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Read more introduction Based Indian Economy Questions and Answers
Question : 1
The main source of National income in India is
a) agriculture
b) trade sector
c) industrial sector
d) service sector
Answer »Answer: (d)
The service sector is one of the three economic sectors. it includes:
- telecommunication,
- hospitality industry/tourism,
- mass media,
- healthcare/ hospitals,
- information technology,
- banking,
- insurance,
- investment management,
- accountancy,
- legal services,
- consulting,
- retail sales,
- real estate,
- education.
The maximum contribution to national income comes from the service sector which contributes around 60%.
Question : 2
National Income is defined as:
- It is the total amount of money government earns through direct tax collection.
- It measures the flow of goods and services in an economy
- It is the total value of stocks held by a country at a particular point of time
a) 2 only
b) 1 and 2
c) 1 only
d) 3 only
Answer »Answer: (a)
National income measures the net value of goods and services produced in a country during a year and it also includes net earned foreign income.
Question : 3
At present, India is following
a) Pegged down exchange rate
b) Floating exchange rate
c) Pegged up exchange rate
d) Fixed exchange rate
Answer »Answer: (b)
The exchange rate can be defined as the value of one currency in terms of another. India follows a floating exchange rate system for the determination of the exchange rate.
A floating exchange rate system can be defined as a system where the exchange rate between currencies is not fixed but keep fluctuating, as they are determined by the demand and supply for the domestic currency in the international market.
India has been operating on a managed floating exchange rate regime since March 1993, marking the start of an era of a market-determined exchange rate regime of the rupee with provision for timely intervention by the central bank.
Question : 4
Which is the correct definition of National Income ?
- National Income means the total amount of money Govt. earns through direct tax collection.
- It is the total value of stocks held by a country at a particular point of time.
- This is the measure of goods and services produced during an accounting year without double counting.
a) 2 only
b) 3 only
c) 1 only
d) All 1, 2 and 3
Answer »Answer: (b)
Question : 5
The most accessible mediumin India is
a) Newspapers
b) Radio
c) Cinema
d) Television
Answer »Answer: (a)
The newspaper’s importance in India may be due to the fact that it is relatively free from the competition despite the rise of the Internet. Though there are a large number of households that own television sets, there are still many more without.
Newspapers are highly affordable and are the more accessible alternative, even for rural areas.
Moreover, it is not dependent on other factors such as infrastructure or availability of electricity, which are both areas that are lacking in India.
Question : 6
When the prices of commodities, goods and services start declining consistently, the phenomenon is known as
a) Deflation
b) Market capitalism
c) Negative growth
d) Discount field
Answer »Answer: (a)
When the prices of commodities, goods and services start declining consistently, the phenomenon is known as deflation. Deflation is because of a fall in the aggregate level of demand.
That is, there is a fall in how much the whole economy is willing to buy and the price for goods. Because the price of goods is falling, consumers have an incentive to delay purchases and consumption until prices fall further, which in turn reduces overall economic activity.
Since this idles the productive capacity, investment also falls, leading to further reductions in aggregate demand.
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