Indian Economy MCQs

Notes:
Per capita income is a measure of the average income earned per person in a given area (usually in a country) in a particular year. When this figure is adjusted for inflation, the real per capita income is obtained, which gives the best measure of an increase in a country’s economic efficiency.

Notes:
David Ricardo, an English classical economist, developed the law of rent in 1809. He presented the law in his book On the Principles of Political Economy and Taxation in 1821.
Ricardo’s theory defined rent as the portion of the earth’s produce that is paid to the landlord for the original and indestructible powers of the soil. In other words, rent is the price paid for the use of land.
Ricardo developed his theory to explain the origin and nature of economic rent. He used the economy and rent to analyze the large rise in corn and land prices during the Napoleonic wars (1805-1815).
The term “Ricardian rent” comes from Ricardo’s theory.

Notes:
Market-wide circuit breakers in the United States are triggered if the S&P 500 Index falls by 7%, 13%, or 20% from the previous day’s closing value. Level 1 and Level 2 trigger 15-minute trading halts if before 3:25 p.m. A Level 3 decline causes trading to be halted for the remainder of the day. Circuit breakers were introduced in 1988 after the 1987 Black Monday crash.

Notes:
Bank Rate Policy, Reserve Ratio Requirements, Liquidity Adjustment Facility, and Open Market Operations are all principal monetary policy instruments used by central banks including RBI. They regulate money supply, liquidity, and interest rates in the economy. Each plays a specific role in achieving monetary stability and economic objectives as part of monetary policy operations.

Notes:
Gulzari Lal Nanda was the first Deputy Chairman of the Planning Commission and later served twice as interim Prime Minister of India. He played a key role in planning policy after independence.

Notes:
Dematerialization converts physical securities into electronic format held in demat accounts. In India, this process is regulated by SEBI. Compulsory dematerialization for listed companies began in 1996 and for private companies from October 27, 2023. Investors must open demat accounts with SEBI-registered Depository Participants. Dematerialization reduces risks related to theft and forgery and enables faster settlements.

Notes:
Dear money refers to money that is hard-to-borrow. Money is hard to borrow due to several reasons such as high interest rates. When central banks implement tight monetary policy, interest rates go up and this will will make money hard to borrow.

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By end-March 2025, external commercial borrowings formed 39.6% of India’s total external debt. Outstanding ECBs reached $291.6 billion, a 16.4% increase from the previous year. ECBs surpassed other categories, becoming the single largest component of India’s external debt until 2025. ECBs are medium or long-term loans raised from abroad by Indian companies.

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The Consolidated Fund of India was created under Article 266 of the Indian Constitution. The government meets all its expenditure from this fund and it needs parliamentary approval to withdraw money from this fund.

Notes:
The first Bank with Limited Liability to be managed by Indian Board was Oudh Commercial Bank. It was established in 1881 at Faizabad. This bank failed in 1958. The first bank purely managed by Indians was Punjab National Bank, established in Lahore in 1895