introduction to indian economy section 9 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (b)

Answer: (d)

The major aim of devaluation is to encourage exports. Devaluation is a deliberate downward adjustment to the value of a country’s currency, relative to another currency, group of currencies. One reason a country may devaluate its currency is to combat trade imbalances.

Devaluation causes a country’s exports to become less expensive, making them more competitive on the global market. This in turn means that imports are more expensive, making domestic consumers less likely to purchase them.

Answer: (d)

Deflation may be caused by a combination of the supply and demand for goods and the supply and demand for money, specifically the supply of money going down and the supply of goods going up.

Answer: (b)

Money laundering occurs in three steps: the first step involves introducing cash into the financial system by some means called as placement; the second involves carrying out complex financial transactions to camouflage the illegal source called layering; and the final step entails acquiring wealth generated from the transactions of the illicit funds called as integration.

Answer: (d)

Depreciation is equal to GNP–NNP (Gross national products–Net national products) Depreciation is also known as consumption of fixed capital. It is the wear and tear to the physical assets. It measures the amount of GNP that must be spent on new capital goods to maintain the existing physical capital stock.