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

Answer: (a)

Primary sector-Agriculture, fishing, mining and quarrying Secondary sector- Manufacturing and construction, Gas and water supply Tertiary sector- trade, transport etc, finance & real estate, community and personnel services

Answer: (c)

Commercial banks are classified into two:

1. Scheduled banks and
2. other banks.

A scheduled bank is one that is included in the second schedule of the Reserve Bank of India Act, 1934. A scheduled bank should comply with the following terms:

1. It must have paid-up capital and reserves as specified; and
2. The activities to be carried out should not be detrimental to the interests of the depositors; and
3. It should be incorporated under the Companies Act, 1956, that is, it should not be the sole trader for a partnership firm or business organization.

Answer: (a)

In 1991, India faced a serious balance of payment crisis and was forced to sharply devalue its currency.

The country was in the grip of high inflation, low growth and the foreign reserves were not even worth meeting three weeks of imports. Under these situations, the currency was devalued to 17.90 against the dollar.

Answer: (c)

The State Bank of India, in September 2007, became the first public sector bank to touch a market capitalisation of Rs 1,00,000 crore following a surge of over three per cent in its share price.

The bank’s shares closed at Rs 1950.70 per share on the BSE, giving it a market cap of about Rs 1,02,665.12 crore. Earlier in the day, the shares rose to a lifetime high of Rs 1,969.80 crore before ending with a gain of 3.43 per cent over the previous close.

SBI is the only second bank in India to have attained a market capitalisation of more than Rs 1,00,000 crore.

Besides, SBI, ICICI Bank has also achieved this milestone and its market cap.

Answer: (a)

The Foreign Exchange Regulation Act (FERA) was legislation passed by the Indian Parliament in 1973 with the aim of regulating payments and foreign exchange.

FERA was repealed in 1999 by the government of Atal Bihari Vajpayee and replaced by the Foreign Exchange Management Act, which liberalised foreign exchange controls and restrictions on foreign investment.

FEMA, which replaced Foreign Exchange Regulation Act (FERA), had become the need of the hour since FERA had become incompatible with the pro-liberalisation policies of the Government of India.

FEMA has brought a new management regime of Foreign Exchange consistent with the emerging framework of the World Trade Organisation (WTO).

Answer: (c)

Micro-credit extended by banks to individuals is reckoned as a part of their priority sector lending and no particular model has been prescribed for microfinance and banks have been extended freedom to formulate their own models.