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

Answer: (c)

In banking, excess reserves are bank reserves in excess of the reserve requirement set by a central bank. They are reserves of cash more than the required amounts.

Holding excess reserves has an opportunity cost if higher risk-adjusted interest can be earned by putting the funds elsewhere; the advantage of holding some funds in excess reserves is that doing so may provide enhanced liquidity and therefore the more smooth operation of the payment system.

Answer: (c)

The limited advisory function accorded to the Public Service Commission and the continued stress on this aspect by the leaders of our freedom movement resulted in the setting up of a Federal Public Service Commission under the Government of India Act, 1935.

The Federal Public Service Commission became the Union Public Service Commission after Independence. The portfolio system in the Executive was introduced by the Indian constitution council act, 1861.

The separation of provincial budgets from the central budget was introduced by the Indian council's Act, 1919.

Answer: (a)

Capital Intensive Industry refers to that industry that requires a substantial amount of capital for the production of goods. In the Capital Intensive Industries, the proportion of capital involved is much higher than the proportion of labour.

This is because the industrial structure and industry type require high-value investments in capital assets. On the basis of this standard, the iron and steel industry can be termed as a capital intensive industry.

Answer: (a)

Open market operation : When RBI buys/sells securities in open market, in case of OMO, first party permanently sells the Government security to second party. Second party is free to do whatever it wants with that security.

Answer: (a)

The Reserve Bank of India on 25 June 2015 extended the deadline for exchanging pre-2005 currency notes of various denominations, including Rs 500 and Rs 1,000, till December 31, 2015.

The rationale behind the move to withdraw banknotes printed prior to 2005 is to remove them from the market because they have fewer security features compared with banknotes printed after 2005.