introduction to indian economy section 2 MCQ Questions & Answers Detailed Explanation

Answer: (d)

Banks are required to invest a portion of their statutory liquidity ratio besides CRR.

Statutory liquidity ratio (SLR) is the Indian government term for reserve requirement that the commercial banks in India require to maintain in the form of gold, cash or government-approved securities before providing credit to the customers.

SLR is determined and maintained by the Reserve Bank of India in order to control the expansion of bank credit.

Answer: (b)

Over population of India can be controlled by providing maximum employment and giving proper education how to control population.

Answer: (c)

A country devalues its currency in order to promote exports. A key effect of devaluation is that it makes the domestic currency cheaper relative to other currencies. There are two implications of devaluation.

First, devaluation makes the country’s exports relatively less expensive for foreigners. Second, the devaluation makes foreign products relatively more expensive for domestic consumers, thus discouraging imports.

This may help to increase the country’s exports and decrease imports, and may therefore help to reduce the current account deficit. One typical example is Thailand in the 1998 Asian financial crisis.

The baht was pegged at 25 to the US dollar before the crisis. During the crisis, the slowdown in export growth caused Thailand to abandon the dollar peg and devalue its currency in order to promote exports.

Answer: (b)

The effect of a government surplus upon the equilibrium level of NNP (Net National Product) is substantially the same as an increase in consumption.

Answer: (c)

The first person to adopt a scientific procedure in estimating the national income was Dr. VKRV Rao in 1931.

Answer: (c)

The logo of the Reserve Bank of India comprises a tiger walking underneath a palm tree.

It is contended that the Reserve Bank of India copied the tiger and palm tree symbol from the gold Mohur issued by the East India Company in the 19th century.

The double Mohur of William IV had a nice reverse, which was a symbol of a Lion and a Palm tree. When RBI was created, it was decided that the reverse of Double Mohur, the Lion and Palm design should be used as the emblem of RBI.

The last-minute modification was made introducing Tiger instead of Lion.