introduction to indian economy section 2 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (a)

Green shoots is the first signs of an improvement in an economy that is performing badly. It was first used in this sense by Norman Lamont, the then Chancellor of the Exchequer of the United Kingdom, during the 1991 recession.

Answer: (c)

Both A and R are true and R gives correct explanation of A. It believes in universalism and globalism.

Answer: (d)

Vijay Kelkar, former finance secretary and advisor to the finance minister almost a decade ago, was mandated by the finance minister to give a report outlining a roadmap for fiscal consolidation. Kelkar, who headed the 13th Finance Commission, was told to present a fiscal road map for the medium term

Answer: (d)

The National Development Council (NDC) or the Rashtriya Vikas Parishad is the apex body for decision making and deliberations on development matters in India, presided over by the Prime Minister.

The functions of the Council are to prescribe guidelines for the formulation of the National Plan;

1. to consider the National Plan as formulated by the Planning Commission;
2. to consider important questions of social and economic policy affecting national development; and
3. to review the working of the Plan from time to time and to recommend such measures as are necessary for achieving the aims and targets set out in the National Plan.

Answer: (d)

The immediate effect of devoting a larger share of national output to investment is that the economy devotes a smaller share to consumption; that is, “living standards” as measured by consumption fall. The higher investment rate means that the capital stock increases more quickly, so the growth rates of output and output per worker rise.

According to Smith, in a developing economy, both income level and capital stock rise. In addition to this, the rate of capital accumulation also shows a tendency to increase.

This leads to an increase in the capital stock in successive periods as investment keeps on increasing. Another important factor that contributes to the progress of an economy is the successive decline in the incremental capital-output ratio due to the influence of capital on the productivity of labour.