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

Answer: (d)

The Mumbai Stock Exchange, also known as Bombay Stock Exchange (BSE), was established in 1875. It claims to be Asia’s first stock exchange and the world’s fastest stock exchange, with a median trade speed of 6 microseconds.

Answer: (e)

The period of Eleventh Five Year Plan was 2007- 2012. It completed its term in March 2012 and the twelfth plan is currently underway

Answer: (c)

The Finance Commission of India is established under Article 280 of the Indian Constitution by the President of India to define the financial relations between the centre and the state.

It is entrusted with the task of distribution of net proceeds of taxes between Centre and the States, to be divided as per their respective contributions to the taxes; determine factors governing Grants-in-Aid to the states and the magnitude of the same; and work with the State Finance Commissions and suggest measures to augment the Consolidated Fund of the States so as to provide additional resources to Panchayats and Municipalities in the state.

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)

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

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.