public finance fiscal & monetary policy section 2 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (c)

SLR or the Statutory Liquidity Ratio is that ratio of total deposits which a commercial bank has to maintain with itself at any given point of time in the form of liquid assets like cash in hand, current balances with other banks and first-class securities which can be turned into cash (gold, cash or other approved securities).

This ratio at present is 25%. Some assets have to be in liquid form to take care of financial emergencies which every bank has to face. It regulates the credit growth in India.

Answer: (c)

It is used to achieve the objectives of balanced economic development, full employment or to establish a welfare state Economics takes care of various needs and wants of life

Answer: (d)

Non-plan expenditures include non-developmental expenditure (interest payment, subsidies, defence expenditure, civil administration), developmental expenditure and expenditure incurred on projects which remained unfinished in the earlier plans.

Answer: (a)

Answer: (b)

Black market is the market in which illegal goods are traded. Goods acquired illegally take one of two price levels:

1. they may be cheaper than legal market prices as the supplier does not have to pay for production costs or taxes; or
2. they may be more expensive than legal market prices as the product is difficult to acquire or produce, dangerous to handle or not easily available legally.

Black-market transactions typically occur as a way for participants to avoid government price controls or taxes, conducting transactions 'under the table.'

So the most defining feature of black markets is that they have to be carried out secretly as they are illegal.