Indian Economy MCQs

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Inflation refers to rise in general price level of goods and services, deflation is fall in general price level of goods and services. Deflation is inflation in negative zone, i.e. a decrease in the general price level of goods and services.

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A complementary commodity is the one which is used along with another commodity. When the price of a particular commodity rises, it will induce a fall in demand of another commodity. This is because consumers may not prefer to buy only the complement.

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Tubewells provide the highest share of irrigation among artificial sources in India after rainfall. According to the 2015-16 Agricultural Census, tubewells accounted for about 46% of the net irrigated area. Tubewell irrigation is most prevalent in northern Indian states such as Uttar Pradesh and Punjab. Canals, rivers, and tanks contribute comparatively less to the total irrigated area.

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The planners at Breton Woods established the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), which today is part of the World Bank Group

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In India, a new private bank is legally incorporated under the Companies Act 2013 as a banking company. The Companies Act 2013 governs formation, registration, and operation of companies in India. Banks must first be incorporated as companies before applying for a banking license from the Reserve Bank of India. The Companies Act 2013 replaced the Companies Act 1956.

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The correct answer is Merit Goods. Merit goods are products or services that the government believes are beneficial for individuals and society, and thus should be available to all, regardless of their ability to pay. Examples include education and healthcare. Governments often subsidize these goods to ensure equitable access, as they can lead to positive externalities, such as a more educated workforce and improved public health.

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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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The correct answer is the Reserve Bank of India (RBI). The RBI is responsible for regulating foreign exchange in India under the Foreign Exchange Management Act (FEMA) of 1999. The “Exchange Control Manual” provides guidelines for foreign exchange transactions and is crucial for maintaining the stability of the Indian economy. The RBI also plays a key role in managing the country’s foreign exchange reserves and ensuring compliance with international financial regulations.

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The correct answer is Offshore Banking. In India, banks operating in Special Economic Zones (SEZs) are classified as offshore banks. These banks cater primarily to foreign entities and provide services that are exempt from certain domestic regulations, promoting international trade and investment. SEZs in India were established to enhance economic growth and attract foreign investment, with specific benefits like tax exemptions and simplified regulations.

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The Reverse Mortgage Scheme in India was launched in 2007. The scheme targets senior citizens aged 60 years and above as beneficiaries. Joint borrowers may apply if at least one applicant is aged 60 years and the other not below 55 years. The scheme allows senior homeowners to mortgage property for regular payments from lenders. Ownership remains with the borrower during the loan tenure.