planning economic development & five year plans section 5 MCQ Questions & Answers Detailed Explanation

Answer: (a)

Despite big investments during the first three Plans, the living standards of the poor could not be raised and poverty and inequity in the distribution of state resources remained stark.

Consequently, the period between 1966 and 1969 marked the shift from a ‘growth approach’ to a ‘distribution from growth approach’.

Looking at the failures and pitfalls the planners suspended the impending Fourth Plan, which was due in 1966, until 1969 for a revision of objectives and targets. This was called the ‘Plan Holiday’ extending from 1 April 1966 to 31 March 1969.

Answer: (b)

Indicative planning is peculiar to the mixed economy. In a mixed economy, the public and private sectors work together. In indicative planning, the private sector is neither rigidly controlled nor directed to fulfil the targets and priorities of the plan.

The state provides all types of facilities to the private sector but does not direct it, rather indicates the areas in which it can help in implementing the plan. Under imperative planning, all economic activities and resources of the economy operate under the direction of the state.

There is complete control over the factors of production by the state. There is no consumer’s sovereignty in such planning.

Answer: (c)

Cost-push inflation occurs when businesses respond to rising costs, by increasing their prices to protect profit margins.

There are many reasons why costs might rise: Component costs, Rising labour costs and higher indirect taxes imposed by the government.

So, direct taxes should be increased when an economy is going through inflationary pressures.

Answer: (a)