Indian Economy MCQs

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When the market is in equilibrium, and when the demand and supply of a commodity increase by an equal absolute amount, the market price will not increase, rather it will remain stable.

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Entertainment Tax is listed under Entry 62 of List II (State List) in the Seventh Schedule of the Indian Constitution. Only state governments could levy and collect this tax before the introduction of Goods and Services Tax in July 2017. Post-GST, most components of Entertainment Tax were subsumed under GST, but states retained powers for some local bodies and specific categories.

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The International Monetary Fund was established in 1944. The IMF has 190 member countries. The World Economic Outlook Report is published by the IMF biannually. The report provides analyses and projections of the global economy. The WEO was first published in 1980. Updates to the report are typically released in January and July.

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Government of India on the basis of the Coinage Act, 1906

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The secondary market is for trading securities that have already been issued. Transactions involve investors buying and selling among themselves. The issuing company does not receive any funds from these trades. Major examples include stock exchanges like NYSE and NASDAQ. The market provides liquidity and facilitates price discovery for already existing securities including shares, bonds, and debentures.

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If people prefer to keep cash with them rather than making deposits in banks, the impact on the Money Supply of the country will be as follows:
[B] The money supply of the country will decrease.
The reason for this is that money supply is typically categorized into different measures, with M1 and M2 being common examples. M1 includes currency (physical cash) in circulation and demand deposits (checking accounts). When people hold more cash and make fewer deposits, it reduces the amount of money in demand deposits, which are considered a part of the money supply. Therefore, if people choose to keep more cash on hand, it reduces the overall money supply in the country, leading to a decrease.

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Financial inclusion refers to providing banking and financial services to all sections of society. RBI and the Government use repo rate adjustments, open market operations, and changing CRR as monetary policy tools to manage money supply and inflation. Financial inclusion programs focus on expanding access, such as PMJDY launched in 2014, and do not directly affect inflation control.

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Margin requirements ensure investors maintain a minimum equity percentage in their accounts. Initial margin is set before a trade, and maintenance margin must be upheld throughout. If equity falls below the maintenance margin, a margin call is issued. This system aims primarily to protect brokers and lenders from losses if securities lose value. U.S. regulations on margin trading are set by the Federal Reserve Board under Regulation T.

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The correct answer is “Letter of Credit.” A Letter of Credit (LC) is a financial document issued by a bank that guarantees payment to the exporter upon presentation of specified documents, such as shipping and insurance documents. This arrangement reduces risk for both parties in international trade, ensuring that the exporter receives payment and the importer receives the goods. LCs are widely used in global commerce, with the first recorded use dating back to the 12th century in the Mediterranean trade.

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Department of Industrial Policy and Promotion is mandated to receive FDI proposals under the Government Route since 2017. It operates under the Ministry of Commerce and Industry. The Foreign Investment Facilitation Portal is managed by the Department for Promotion of Industry and Internal Trade, previously DIPP. FDI proposals in single brand retailing must be filed online with this department, complying with FEMA regulations.