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

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.

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%.

Answer: (a)

The Reserve Bank of India (RBI) was founded on 1 April 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934.

Following India’s independence on 15 August 1947, the RBI was nationalised on 1 January 1949.

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: (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: (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.