introduction to indian economy section 12 MCQ Questions & Answers Detailed Explanation

Answer: (a)

Microeconomics is a branch of economics that studies the behaviour of individuals and firms in making decisions regarding the allocation of limited resources. Typically, it applies to markets where goods or services are bought and sold.

This is in contrast to macroeconomics, which involves the “sum total of economic activity, dealing with the issues of growth, inflation, and unemployment.”

So the study of sales of TISCO will come under microeconomics.

Answer: (b)

All expenditures that promote economic growth and development are termed development expenditure.

Expenditure on infrastructure development, public enterprises or the development of agriculture increase productive capacity in the economy and bring income to the government.

Expenditures in the nature of consumption such as Defence, interest payments, expenditure on law and order, public administration, do not create any productive asset which can bring income or returns to the government are non-development expenditures.

Answer: (d)

For calculating national income, the Indian economy is divided into 14 broad sectors, which are then grouped into three main categories A, B and C.

In India, agriculture, forestry and logging, fishing, mining and quarrying, registered manufacturing and construction units are included in category A. The output method is applied to category A.

The value added by this category is found by subtracting the value of raw materials and other inputs from the aggregate of commodity-wise output.

Answer: (c)

The poverty line is a minimum level of income deemed adequate in a particular country. The common international poverty line has in the past been roughly $1 a day.

In 2008, the World Bank came out with a revised figure of $1.25 at 2005 purchasing power parity.

In India, the poverty line is identified in monetary units as the level of income or consumption expenditure required in order to avoid poverty.

Answer: (d)

The problem of over population can be solved by two ways

An effective employment policy, which can absorb the growing number of workers and promote economic growth.

An imaginative family planning programme to encourage families to adopt the small family norm.

Answer: (c)

The fringe benefits tax (FBT) was introduced in India in the year 2005-2006. Fringe Benefits Tax (FBT) is fundamentally a tax that an employer has to pay in lieu of the benefits that are given to his/her employees. It was an attempt to comprehensively levy tax on those benefits, which evaded the taxman.

The list of benefits encompassed a wide range of privileges, services, facilities or amenities which were directly or indirectly given by an employer to current or former employees, be it something simple like telephone reimbursements, free or concessional tickets or even contributions by the employer to a superannuation fund.

FBT was introduced as a part of the Finance Bill of 2005 and was set at 30% of the cost of the benefits given by the company, apart from the surcharge and education cess that also needed to be paid.