introduction to indian economy section 11 MCQ Questions & Answers Detailed Explanation

Answer: (c)

An open market operation (also known as OMO) is an activity by a central bank to buy or sell government bonds on the open market. A central bank uses them as the primary means of implementing monetary policy.

The usual aim of open market operations is to control the short term interest rate and the supply of base money in an economy and thus indirectly control the total money supply.

This involves meeting the demand of base money at the target interest rate by buying and selling government securities, or other financial instruments.

Monetary targets, such as inflation, interest rates, or exchange rates, are used to guide this implementation.

Answer: (a)

Current account convertibility was first coined as a theory by the Reserve Bank of India in 1997 by the Tarapore Committee. Full capital account convertibility allows local currency to be exchanged for foreign currency without any restriction on the amount.

Answer: (d)

The important heads of developmental expenditure within the revenue account are,

1. social and community services,
2. economic services and
3. grants-in-aid to states and union territories.

The largest component in this group is economic services.

Economic services include,

1. general economic services,
2. agriculture and allied services,
3. industry; and minerals,
4. water and power and power development,
5. transport and communication,
6. railways,
7. post and telegraphs etc.

Answer: (a)

Economics takes care of various needs and wants of life.

Answer: (b)

The National Social Assistance Scheme (NSAS) or National Social Assistance Programme (NSAP) is a flagship welfare programme of the Government of India initiated on 15 August 1995. It provides a pension for the elderly who live below the poverty line.

Article 41 of the Indian Constitution directs the State to provide public assistance to its citizens in case of unemployment, old age, sickness and disablement and in other cases of undeserved want within the limit of its economic capacity and development. The scheme is a “giant step” towards achieving the directive principle in the Constitution.

Answer: (c)

Dadabhai Naroji propounded the drain theory. The drain, he declared, was the basic cause of India’s poverty and a fundamental evil of British rule in India. Thus, he argued in 1880 that it is not pitiless operations of economic laws but it is the thoughtless hand, pitiless actions of the British policy.