Indian Economy MCQs

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The industries covered in the Index of Eight Core include Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement and Electricity.

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WIPO-World Intellectual Property Organization

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Sterilization in the context of foreign inflow refers to the process of withdrawing an equivalent amount of local currency from circulation to offset the effects of foreign currency inflows. This is done to maintain a stable exchange rate and control inflation. Central banks often engage in sterilization to prevent excessive money supply growth that could lead to inflation. For example, when foreign investment increases, it can lead to an appreciation of the local currency. sterilization helps mitigate this by neutralizing the impact on the money supply.

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A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand or at a set time. Among the options: 1. Airway Bill: Not a negotiable instrument. it serves as a receipt for goods and a contract of carriage. 2. Bank Note: A negotiable instrument. it represents a promise to pay the bearer a specific amount. 3. Letter of Credit: Not a negotiable instrument. it is a financial document issued by a bank guaranteeing payment. 4. Demand Draft: A negotiable instrument. it is an order to pay a specific amount on demand. Thus, the correct answer is Demand Draft.

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Fiscal policy is the government’s use of taxation and spending to influence the economy. The government adjusts its spending levels and tax rates to monitor and influence the nation’s economy. The two main instruments of fiscal policy are changes in the level and composition of taxation and government spending in various sectors.
Fiscal policy is one of the main policy approaches used by economic managers to steer the broad aspects of the economy. The other main policy approach is monetary policy, which deals with the supply of money in the economy and the rate of interest.

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The correct answer is “Rural Infrastructural Development Fund.” This fund was established to provide refinance assistance for various rural development activities, including small irrigation projects, dairy development, and farm mechanization. Launched in 2006 by the National Bank for Agriculture and Rural Development (NABARD), it aims to enhance rural infrastructure and improve the livelihoods of rural communities. The fund supports initiatives that contribute to sustainable agricultural practices and rural economic growth.

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The provisions relating to promissory notes are incorporated in the Negotiable Instruments Act, 1881. This Act governs various financial instruments, including promissory notes, bills of exchange, and cheques. It was enacted to facilitate trade and commerce by providing a legal framework for negotiable instruments in India. The Indian Contract Act, 1872, primarily deals with general contract law, while the Indian Partnership Act, 1932, focuses on partnerships.

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In economics, the Laffer curve is a hypothetical representation of the relationship between government revenue raised by taxation and all possible rates of taxation. It is used to illustrate the concept of taxable income elasticity – that taxable income will change in response to changes in the rate of taxation.

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The indirect taxes like VAT etc are paid by everyone if they buy any product irrespective of financial conditions. Direct taxing is considered the most progressive taxing mechanisms because they justify the income levels of the people

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The correct answer is “Increase in tax revenue up to a point and then decrease.” This concept is illustrated by the Laffer Curve, which posits that there is an optimal tax rate that maximizes revenue. Beyond this point, higher tax rates can discourage work and investment, leading to decreased economic activity and ultimately lower tax revenue. Historical examples include the U.S. tax cuts in the 1980s, which led to increased revenue despite lower rates, demonstrating this principle in action.