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The following question based on Introduction to Indian Economy topic of indian economy mcq
(a) Fully Capital Account Convertibility
(b) Foreign Exchange Reserve
(c) Effect of Oil-prices on the Indian economy
(d) Special Economic Zone
The correct answers to the above question in:
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.
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Read more introduction Based Indian Economy Questions and Answers
Question : 1
Which one of the following is a development expenditure?
a) Administration
b) Grant-in-aid
c) Debt services
d) Irrigation expenditure
Answer »Answer: (d)
The important heads of developmental expenditure within the revenue account are,
- social and community services,
- economic services and
- grants-in-aid to states and union territories.
The largest component in this group is economic services.
Economic services include,
- general economic services,
- agriculture and allied services,
- industry; and minerals,
- water and power and power development,
- transport and communication,
- railways,
- post and telegraphs etc.
Question : 2
The Government of India derives its single largest source of revenue from
a) Customs Duties
b) Direct Taxes
c) Deficit Financing
d) Union Excise Duties
Answer »Answer: (d)
Income Tax (corporate and non-corporate combined) contribute about 56 per cent of the tax revenue of India. But, income tax, apart from agricultural income is shared between the Union and states.
Among the given options, Excise duty is the chief and single largest source of revenue income. The Government of India earns maximum from Union Excise Duty.
Question : 3
What has been the order of India’s imports during the last three years ?
a) US $ 40 billion
b) US $ 30 billion
c) US $ 50 billion
d) US $ 60 billion
Answer »Answer: (a)
India’s exports for the month of August 2012 stood at USD 22.3 billion compared to August 2011 when it stood at USD 24.7 billion registering a decline of (-) 9.7%.
During August 2012, the imports were $ 38 billion as compared to 40 billion dollars in August 2011 registering a decline of (-) 5.08%.
Question : 4
What are “Open Market Operations”?
a) Selling of currency by the RBI
b) Activities of SEBI registered brokers
c) Selling of gilt-edged securities by the Government
d) Sale of shares by FIIs
Answer »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.
Question : 5
Which of the following are the roles of government in the economy:
- Provision of public goods
- Provision of merit goods
- Poverty reduction
a) 2 only
b) 3 only
c) 1 only
d) 1, 2 and 3
Answer »Answer: (d)
Provision of public goods like a defence which no private agency can be entrusted with.
Provision of merit goods - goods like education and housing - through policies that encourage the consumption of such goods and discourage the use of non-merit goods like cigarettes.
Poverty reduction is considered a prime responsibility of all modern governments, as the market caters to the needs of only those who can afford to pay, not of the poor.
Question : 6
With reference to ‘Economics’ which statement is correct?
- Economics is an area where people, society and government prioritize their choices in the process of using the infrequent reserves to satisfy the various needs and wants of life.
- Economics is considered an exercise in the spacetime continuum.
- Economics is considered an exercise in the time continuum.
a) 1 and 2
b) 3 only
c) 1 only
d) 1, 2 and 3
Answer »Answer: (a)
Economics takes care of various needs and wants of life.
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 9
introduction to indian economy section 10
introduction to indian economy section 11
introduction to indian economy section 12
introduction to indian economy section 13
introduction to indian economy section 14
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