introduction to indian economy section 14 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (c)

National Income is essentially what a country produces in a given year. It takes into account the value of all the goods and services in an economy.

The term is interchangeable with Gross Domestic Product (GDP) The services industry accounted for over 57% of India's gross domestic product in 2010- 2011 and is by far the largest.

Answer: (a)

The existence of a parallel economy or black money makes the monetary policies less effective.

A parallel economy, based on black money or unaccounted money, causes high circulation of money in the market and thus causes inflation etc.

Answer: (d)

Austerity describes policies used by governments to reduce budget deficits during adverse economic conditions.

These policies may include expenditure 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)

The question talks about marginal return increasing at a diminishing rate which, in reality, is diminishing marginal return.

In economics, the law of diminishing returns states: “If increasing amounts of a variable factor are applied to a fixed quantity of other factors per unit of time, the increments in total output will first increase but beyond some point, it begins to decline”.

Richard A. Bilas describes the law of diminishing returns as: “If the input of one resource to other resources is held constant, total output will increase but beyond some point, the resulting output increases will become smaller and smaller.”

So as the marginal return increases at a diminishing rate, the total return will eventually decrease.

Answer: (c)

The Hindu rate of growth refers to the low annual growth rate of the socialist economy of India before 1991, which stagnated around 3.5% from the 1950s to the 1980s, while per capita income growth averaged 1.3%. The term was coined by Indian economist Raj Krishnaa.

It suggests that the low growth rate of India, a country with a high Hindu population was in sharp contrast to high growth rates in other Asian countries, especially the East Asian Tigers, which were also newly independent.

This meaning of the term, popularized by Robert McNamara, was used disparagingly and has connotations that refer to the supposed Hindu outlook of fatalism and contentedness.