Indian Economy MCQs

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Interest rate risk is a type of market risk. It’s the risk that the value of a bond or other fixed-income investment will decrease due to changes in interest rates. Interest rate risk can be avoided or eliminated.
Interest rate risk occurs when interest rates in an economy change. This can impact the interest rate on fixed-income securities. The risk is that the interest paid on a fixed-income security will decrease, resulting in a smaller payout to the investor. The bond with the longest maturity and lowest coupon rate has the highest interest rate risk.

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please note bank functions as an agent or agency when it buys or sells securities on behalf of the customer or collects and makes payment on behalf of the customer

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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.

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Round tripping refers to money from one country going out through unofficial channels and being invested back into the same country from outside to avail of tax benefits under the double tax avoidance agreement (DTAA). Round Tripping makes the government lose large amount of revenue because the domestic firms, route the investment through Mauritius. So, now finally CBDT (Central Board of Direct Taxes) proposes that the Domestic companies routing their investments through Mauritius would soon have to pay capital gains tax. For this, a review of the capitals gains tax provisions is required and CBDT is pressing for it.

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The fiscal deficit may be decomposed into primary deficit and interest payment. The primary deficit is obtained by deducting interest payments from the fiscal deficit. Thus, primary deficit is equal to fiscal deficit less interest payments. It indicates the real position of the government finances as it excludes the interest burden of the loans taken in the past.

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Inflation Indexed Bonds (IIBs) are pegged to the Consumer Price Index (CPI). This means their interest payments and principal value adjust based on changes in the CPI, which measures the average change over time in the prices paid by consumers for goods and services. IIBs aim to protect investors from inflation, ensuring that the purchasing power of their returns is maintained. In India, the CPI is the primary measure for these bonds, while the Wholesale Price Index (WPI) measures price changes at the wholesale level and is not used for IIBs.

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When an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to the public, it is called Initial Public Offering or IPO. In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), the best offering price and the time to bring it to market.

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• Crude Birth Rate : Number of Births per 1000 population in a given year.
• Crude Death Rate : Number of Deaths per 1000 population in a given year.
• Natural Increase Rate of Population = Crude Birth Rate- Crude Death rate

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Small Industries Development Bank of India is an independent financial institution aimed to aid the growth and development of micro, small and medium-scale enterprises. Small Industries Development Bank of India (SIDBI) was set up on April 2, 1990 under small industries development bank of India act.