Indian Economy MCQs

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Muriate of potash is a common name for potassium chloride. It is chemically neutral and does not significantly alter soil pH. Farmers use it mainly as a source of potassium. Urea and ammonia may acidify soil with repeated use, while rock phosphate tends to make soil slightly acidic over time. Muriate of potash is widely produced and used worldwide.

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Monetary Policy Committee (MPC) committee comprises six members – three officials of the Reserve Bank of India and three external members nominated by the Government of India.

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The Index of Eight Core Industries includes Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement, and Electricity. Pharmaceuticals are not included in this index. The Index serves as an indicator for measuring the industrial performance in India, and is released monthly by the Ministry of Commerce and Industry since 2004.

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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.

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The first stock exchange was in the Netherlands when the Dutch East India Company issued the first shares on the Amsterdam Stock Exchange

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Plan expenditures refer to the money that is spent by a government or other organization on specific plans or projects. These plans or projects are typically designed to achieve specific goals or objectives, and the plan expenditures are used to fund the activities and operations associated with implementing those plans.

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The Tendulkar Committee was formed in 2005 and submitted its report in 2009. It shifted poverty measurement from a calorie-based model to a broader Poverty Line Basket approach. This included private expenditure on health and education alongside food and other needs. The committee recommended separate monetary values for rural and urban areas, utilized the Mixed Reference Period data, and made adjustments for price changes based on consumption patterns.

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Credit creation by commercial banks occurs under the fractional reserve system. Banks keep a part of deposits as reserves and lend the rest. This process increases the total supply of money. The cash reserve ratio (CRR) determines the amount banks must retain. The money multiplier is calculated as 1 divided by the CRR. New loans are redeposited and re-lent, multiplying deposits.

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Foreign Portfolio Investment refers to investments in securities like stocks and bonds by foreign investors. FPI is highly liquid and can be withdrawn quickly. FPI inflows and outflows are sensitive to global and domestic financial conditions. Sudden withdrawal of FPI causes market volatility. FPI is termed “hot money” compared to FDI, which involves long-term capital commitments. FPI contributed to major capital outflows during financial crises.

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Economic growth results in higher disposable income available with the consumers which increases the overall demand along with the supply available for the consumers. This increase in demand spurs inflation, which eventually becomes a necessary evil for a growing economy.