introduction to indian economy section 14 MCQ Questions & Answers Detailed Explanation

Answer: (a)

The existence of a parallel economy or black money makes the monetary policies less effective.

A parallel economy, based on black money or unaccounted money, causes high circulation of money in the market and thus causes inflation etc.

Answer: (d)

Austerity describes policies used by governments to reduce budget deficits during adverse economic conditions.

These policies may include expenditure cuts, tax increases; this is done in an economic crisis situation to improve the credit rating of the countries going through adverse economic conditions.

Answer: (a)

The question talks about marginal return increasing at a diminishing rate which, in reality, is diminishing marginal return.

In economics, the law of diminishing returns states: “If increasing amounts of a variable factor are applied to a fixed quantity of other factors per unit of time, the increments in total output will first increase but beyond some point, it begins to decline”.

Richard A. Bilas describes the law of diminishing returns as: “If the input of one resource to other resources is held constant, total output will increase but beyond some point, the resulting output increases will become smaller and smaller.”

So as the marginal return increases at a diminishing rate, the total return will eventually decrease.

Answer: (d)

As per data released by Brickwork Ratings in December 2015, Maharashtra earns approximately 70 per cent of its total receipts through tax revenues — the highest among the bigger states — followed by Gujarat and Tamil Nadu.

It is the biggest economy within India at Rs 16.87 lakh crore in terms of gross state domestic product (GSDP). The state also contributes to about 40 per cent of India’s income tax collections.

Answer: (c)

Fiscal Deficit: When a government’s total expenditure exceeds the revenue that it generates (excluding money from borrowings).

Deficit differs from debt, which is an accumulation of yearly deficits.

Answer: (a)

Swachh Bharat is India’s biggest ever cleanliness campaign that was originally known as Nirmal Bharat Abhiyan and Total Sanitation Campaign from 1999 to 2012.

On 2 October 2014, the Nirmal Bharat Abhiyan campaign was relaunched as Swachh Bharat Abhiyan (Clean India Mission) which aims to eradicate open defecation by 2019.