Indian Economy MCQs

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The 11th Five Year Plan was implemented from 2007-2012, when Manmohan Sigh was India’s Prime Minster. The main slogan for the 11th FYP was “Faster and more inclusive growth”. The 11th FYP made special emphasis on Financial Inclusion, poverty reduction, empowerment through education and skill development etc.

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The National Housing Bank (NHB) is the regulator and supervisor of housing finance companies (HFCs) in India. The NHB was established in 1988 and operates as a subsidiary of the Reserve Bank of India. The NHB’s goal is to promote housing finance institutions at the ground and regional levels.

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Sir Chintaman Dwarkanath Deshmukh was the first Indian to be the governor of the Reserve Bank of India (RBI), serving from 1943 to 1949. He played a crucial role in shaping India’s monetary policy post-independence and was instrumental in establishing the RBI as a key institution in the Indian economy. Deshmukh was also a prominent figure in the Indian banking sector, contributing to various financial reforms.

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The Washington Consensus refers to a set of economic policy prescriptions for developing countries, primarily focused on market-oriented reforms. It was formulated in the late 1980s and emphasizes trade liberalization, deregulation, and privatization. While the International Monetary Fund (IMF) and the World Bank are often associated with the Consensus due to their roles in providing financial assistance and policy advice, the World Trade Organization does not embody the trade liberalization aspect central to the Consensus. The US Treasury Department and the US Federal Bank are not a part of the Washington Consensus framework.

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The Laffer curve is a theoretical concept in economics that illustrates the relationship between tax rates and government revenue. The curve is named after economist Arthur Laffer, who popularized the concept in the 1970s. The basic idea behind the Laffer curve is that there is a certain tax rate that will maximize government revenue. At a 0% tax rate, the government will obviously not collect any revenue. At a 100% tax rate, the government will also not collect any revenue because people will have no incentive to work. The Laffer curve suggests that there is a point in between these two extremes where the government will collect the most revenue. The exact shape and location of the Laffer curve will vary depending on various factors, such as the state of the economy and the efficiency of the government’s tax collection system.

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The P/E ratio, or Price to Earnings ratio, is a key financial metric used to evaluate a company’s valuation. It is calculated by dividing the market price per share by the earnings per share (EPS). A high P/E ratio may indicate that a stock is overvalued or that investors expect high growth rates in the future, while a low P/E may suggest undervaluation or poor growth prospects. The P/E ratio is widely used by investors to compare the relative value of companies within the same industry.

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The core method of stabilizing markets under the Market Stabilisation Scheme (MSS) is purchasing Treasury Bills and/or dated securities. The MSS was introduced by the Reserve Bank of India in 2004 to manage liquidity and stabilize the rupee. By purchasing securities, the RBI absorbs excess liquidity, helping to control inflation and stabilize the currency. This method is crucial for maintaining economic stability, especially during periods of volatility.

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The green shoe option is a clause in the underwriting agreement of an IPO, which allows to sell additional shares, usually 15%, to the public if the demand exceeds expectations and the stock trades above its offering price. This option, also known as the over-allotment provision. It gets its name from the Green Shoe company, which was the first company to allow such an option.

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Gujarat ranked first among Indian states in ease of doing business rankings by World Bank. Andhra Pradesh ranked second.

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KYC guidelines were issued under Section 35 A of the Banking Regulation Act, 1949.These were introduced in year 2002 by RBI and all banks were asked to make all accounts KYC compliant by 31 December 2005.Banks are also required to periodically update their customers’ KYC details.