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

Answer: (a)

Between 1951 and 2000 the share of agriculture in GDP fell from around 59% to around 25%.

The share of the services sector in GDP was more than the industrial sector. Between 1951 and 2000 it was around 28% for services and 13 % for manufacturing in 1950.

In 1990 it was around 40 % services and 24 % manufacturing. It was around 51 % services in 2000.

Answer: (b)

Zero-based budgeting is an approach to planning and decision-making which reverses the working process of traditional budgeting. In zero-based budgeting, every line item of the budget must be approved, rather than only changes. During the review process, no reference is made to the previous level of expenditure.

Regarding Zero Base Budgeting (ZBB) Existing Government programmes can be discarded under ZBB if they are found to be outdated.

Moreover, ZBB is difficult to be applied to Human Development programmes as the outcome of such programmes is intangible in nature.

Answer: (d)

Austerity describes policies used by governments to reduce budget deficits during adverse economic conditions. These policies may include spending 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)

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)

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)

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