introduction to indian economy section 2 MCQ Questions & Answers Detailed Explanation
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The following question based on Introduction to Indian Economy topic of indian economy mcq
(a) Rate at which banks advance loans to the customers
(b) Rate at which Central bank of a country advances loans to other banks in the country
(c) Rate at which banks lend among themselves
(d) Rate at which banks lend to money lenders
The correct answers to the above question in:
Answer: (b)
Bank Rate refers to the official interest rate at which RBI will provide loans to the banking system which includes commercial/cooperative banks, development banks etc.
Such loans are given out either by direct lending or by rediscounting (buying back) the bills of commercial banks and treasury bills. Thus, the bank rate is also known as the discount rate.
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Read more introduction Based Indian Economy Questions and Answers
Question : 1
Indian Economy is a/an :
a) Mixed Economy
b) Independent Economy
c) Capitalist Economy
d) Communist Economy
Answer »Answer: (a)
All developing countries like India are mixed economies. A mixed economy is neither pure capitalism nor pure socialism but a mixture of the two systems.
The features of a mixed economy which exist in India are:
- Private ownership of means of production;
- The important role of market mechanism;
- Presence of a large public sector along with free enterprise;
- Economic planning
Question : 2
The system of issuing and monitoring of money in the market is known as–
a) Fixed reserve ratio
b) Proportional reserve ratio
c) Minimum reserve ratio
d) Floating reserve ratio
Answer »Answer: (c)
The reserve requirement (or cash reserve ratio) is a central bank regulation that sets the minimum reserves each commercial bank must hold (rather than lend out) of customer deposits and notes. These required reserves are normally in the form of cash stored physically in a bank vault (vault cash) or deposits made with a central bank.
The required reserve ratio is sometimes used as a tool in monetary policy, influencing the country’s borrowing and interest rates by changing the number of funds available for banks to make loans with.
The main objective of minimum reserves is the stabilisation of money market rates. Minimum reserves allow credit institutions to smooth out fluctuations in liquidity such as those caused by the demand for banknotes.
Question : 3
Which one of the following disburses long term loans to private industry in India ?
a) Life Insurance Corporation of India
b) Food Corporation of India
c) Primary Credit Society
d) Land Development Banks
Answer »Answer: (d)
The medium and long term loans are disbursed to the farmers through Primary Land Development Banks who draw their finances from Central Land Development Banks who in turn draw their finances from NABARD.
As for the short term credit, this is disbursed to the farmers through Primary Agricultural Credit Societies who draw their finances from Central Cooperative Banks who in turn draw their finances from the State Cooperative Banks.
Question : 4
Which one is not the main objective of fiscal policy in India?
a) To promote price stability
b) To increase liquidity in the economy
c) To minimize the inequalities of income & wealth
d) To promote employment opportunity
Answer »Answer: (b)
Fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation’s economy. It is used to stabilize the economy over the course of the business cycle.
Fiscal policy is the sister strategy to monetary policy through which a central bank influences a nation’s money supply.
Question : 5
ICI is the name associated with
a) Indian Cement Industry
b) a MNC which manu-factures chemicals
c) Chamber of Commerce and Industry
d) a private sector bank
Answer »Answer: (b)
Imperial Chemical Industries (ICI) was a British chemical company, taken over by a number of chemical companies, including Huntsman Corporation, a United States-based company, and AkzoNobel, a Dutch conglomerate, two of the largest chemical producers in the world.
In its heyday, ICI was the largest manufacturing company in the British Empire, and commonly regarded as a “bellwether of the British economy. It produced paints and speciality products (including ingredients for foods, speciality polymers, electronic materials, fragrances and flavours).
GET Introduction to Indian Economy PRACTICE TEST EXERCISES
introduction to indian economy section 1
introduction to indian economy section 2
introduction to indian economy section 3
introduction to indian economy section 4
introduction to indian economy section 5
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introduction to indian economy section 14
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