introduction to indian economy section 7 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (d)

The income approach equates the total output of a nation to the total factor income received by residents or citizens of the nation.

The main types of factor income are:

1. Employee compensation (cost of fringe benefits, including unemployment, health, and retirement benefits);
2. Interest received net of interest paid;
3. Rental income (mainly for the use of real estate) net of expenses of landlords; and
4. Royalties paid for the use of intellectual property and extractable natural resources.

All remaining value-added generated by firms is called the residual or profit. If a firm has stockholders, they own the residual, some of which they receive as dividends.

Profit includes the income of the entrepreneur - the businessman who combines factor inputs to produce a good or service.

Answer: (c)

Himayat is a training-cum-placement programme for unemployed youth in Jammu and Kashmir. Under the program, the youth of the state will be provided short-term training for at least 3 months, in a range of skills for which there is good market demand.

The scheme aims to train 1,00,000 youth in 5 years and provide at least 75% of them with jobs.

Answer: (b)

It will remain the same, because banks do not increase the national income. So it remains the same immaterial whether banks are there or not.

Answer: (c)

When a government’s total expenditure exceeds the revenue that it generates (excluding money from borrowings).

Deficit differs from debt, which is an accumulation of yearly deficits. A fiscal deficit is regarded by some as a positive economic event.

Answer: (a)

In terms of Section 22 of the Reserve Bank of India Act, the RBI has been given the statutory function of note issue on a monopoly basis. The note issue in India was originally based upon the “Proportional Reserve System”. When it became difficult to maintain the re-serve proportionately, it was replaced by the “Minimum Reserve System “.

According to the RBI Amendment Act of 1957, the bank should now maintain a minimum reserve of Rs.200 crore worth of gold coins, gold bullion and foreign securities of which the value of gold coin and bullion should be not less than Rs.115 crore.