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

Answer: (d)

National Income is the money value of all the final goods and services produced by a country during a period of one year.

National Income consists of a collection of different types of goods and services of different types.

Answer: (b)

Devaluation is a deliberate downward adjustment to the value of a country’s currency, relative to another currency, group of currencies.

Since it is relative to other currencies so the internal price remains unchanged. It causes a country’s exports to become less expensive and imports more expensive.

Answer: (d)

IDBI Bank Limited is an Indian financial service company headquartered in Mumbai, India. RBI categorised IDBI as an “other public sector bank”. It was established in 1964 by an Act of Parliament to provide credit and other facilities for the development of the fledgling Indian industry.

The Industrial Development Bank of India (IDBI) was established on 1 July 1964 under an Act of Parliament as a wholly-owned subsidiary of the Reserve Bank of India.

On 16 February 1976, the ownership of IDBI was transferred to the Government of India and it was made the principal financial institution for coordinating the activities of institutions engaged in financing, promoting and developing industry in the country.

Answer: (d)

In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.

Economists generally agree that high rates of inflation and hyperinflation are caused by excessive growth of the money supply. Low or moderate inflation may be attributed to fluctuations in real demand for goods and services, or changes in available supplies such as during scarcities, as well as to growth in the money supply.

However, the consensus view is that a long sustained period of inflation is caused by the money supply growing faster than the rate of economic growth.

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: (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