money supply, banking & financial institutions section 10 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (c)

Public expenditure whether plans or non-plan or capital or revenue is classified into developmental and non-developmental expenditure. The expenditure which is incurred on activities directly related to economic development is called developmental expenditure.

Hence, expenditure incurred on education, health care, scientific research; infrastructure and so on is developmental expenditure. Expenditure incurred on general essential services required for the normal running of the government is termed as a non-developmental expenditure.

Therefore, expenditure incurred on services relating to general administration, police, defence, judiciary etc. is non-developmental expenditure.

Answer: (b)

Money supply = (Money Multiplier) X (Monetary Base)

From the above formula, the money supply can be increased by increasing the money multiplier or monetary base or both.

Answer: (d)

Foreign Direct Investment can come through two routes viz. automatic and government approval routes. More than 95% of the FDI comes in India through the “Automatic Route” where no government approval is required and are subject to only sectoral laws. Certain sectors that are still under the “Government approval route” are scrutinised and cleared by the respective departments and ministries.

In respect of applications in which there is a doubt about the Administrative Ministry/Department concerned, DPIIT shall identify the Administrative Ministry/Department where the application will be processed.

In respect of proposals where the respective department/ ministry proposes to reject the proposals or in cases where conditions for approval are stipulated in addition to the conditions laid down in the FDI policy or sectoral laws/regulations, the concurrence of DPIIT shall compulsorily be sought by the said Ministry.

The Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry sets the rules for foreign investment and makes policy pronouncements on FDI through various Press Releases.

Answer: (b)

Answer: (d)

A bear is a speculator who is wary of fall in prices and hence sells securities so that he may buy them at cheap prices in future.

He does not have securities at present but sells them at higher prices in anticipation that he will supply them business purchasing at lower prices in the future.

If the prices move down as per the expectations of the bear he will earn profits out of these transactions.