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

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)

With the increase in GDP, aggregate demand increases, because more production means people have more disposable income, which means more consumer spending.

As a result, prices rise in response, and in conclusion, because aggregate demand grows faster than long-term aggregate supply, economic growth will be coupled with inflation.

Answer: (b)

The Reserve Bank of India was nationalised on 1 January 1949 under the Reserve Bank (Transfer of Public Ownership) Act, 1948.

Since then, RBI started working as a government-owned central bank of India. It was founded on 1 April 1935.

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: (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)

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.