introduction to indian economy section 6 Practice Questions Answers Test with Solutions & More Shortcuts
Introduction to Indian Economy PRACTICE TEST [14 - EXERCISES]
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introduction to indian economy section 14
Question : 1
The term stagflation refers to a situation where
a) rate of growth and prices both are decreasing
b) rate of growth is slower than the rate of price increase
c) rate of growth is faster than the rate of price increase
d) growth has no relation with the change in price
Answer »Answer: (b)
Stagflation is a condition of slow economic growth and relatively high unemployment.
It is accompanied by a rise in prices, or inflation. Stagflation occurs when the economy isn’t growing but prices are increasing, which is not a good situation for a country to be in.
Question : 2 [SSC LDEO 2012]
Which one of the following is an example for Non-Banking Financial institution?
a) SBI
b) RBI
c) IOB
d) LIC
Answer »Answer: (d)
A non-bank financial institution (NBFI) is a financial institution that does not have a full banking license or is not supervised by a national or international banking regulatory agency.
LIC is an example of a NonBanking Financial institution.
Question : 3 [SSC MTS 2011]
Who estimated the National Income for the first time in India ?
a) Dadabhai Naoroji
b) Mahalanobis
c) V.K.R.V. Rao
d) Sardar Patel
Answer »Answer: (a)
Dadabhai Naoroji prepared the first estimates of National income in 1876. He estimated the national income by first estimating the value of agricultural production and then adding a certain percentage as non-agricultural production.
Question : 4
Which of the following is not true when the interest rate in the economy goes up?
a) Lending decreases
b) Return on capital increases
c) Cost of production increases
d) Saving increases
Answer »Answer: (b)
The rise in interest rates results in an increased cost of borrowing so lending decreases because businesses do not borrow at a high cost. Moreover, it results in an increase in the cost of production as the cost for all suppliers of raw material increases due to an increase in their borrowing cost.
For individuals, the savings increase as they start saving in lieu of higher return as interest. Higher rates of interest result in a decrease in return on capital as the cost of investment in capital increases.
Question : 5 [SSC CGL Pre 2004]
One of the objectives of Industrial Licensing Policy in India was to ensure :
a) free flow of foreign capital in Indian industries.
b) creation of adequate employment opportu-nities.
c) use of modern technology.
d) balanced industrial development across regions.
Answer »Answer: (d)
In India, there are some regulations and restrictions with regard to establishing industries in certain categories. This is done by making it mandatory to obtain licenses before setting up such an industry.
The Licence Raj continued till 1991 (liberalization was introduced) as a result of India’s decision to have a planned economy where all aspects of the economy are controlled by the state and licences are given to a select few.
Up to 80 government agencies had to be satisfied before private companies could produce something and, if granted, the government would regulate production. The Industrial Policy Resolution 1956 aimed at the removal of regional disparities through the development of regions with low industrial bases.
The Indian economy was then guided by the socialistic model of planned development rather than being guided by profit.
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Introduction to Indian Economy Shortcuts »
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indian economy MCQ CATEGORIES
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» Introduction to Indian Economy
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» Planning, Economic Development & Five year Plans
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» National Income & Human Development Index
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» Agriculture Sector, Subsidy and Food Processing
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» Industries, Manufacturing & Service Sectors
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» Inclusive growth, Sustainable development and employment
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» Poverty & Unemployment
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» Introduction to Micro Economics
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» Introduction to Macro Economics
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» Macro fundamentals, GDP, Investment, Growth
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» Demand & Supply, Profit Loss, Inflation & Price Index
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» Fiscal Policy, Public Finance and Monetary Policy
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» Money Supply, Banking and Financial Institutions
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» Taxes Types, Methods & Budgeting Process
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» Banking, Security Market & Insurance
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