Indian Economy MCQs

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When the market is in equilibrium, and when the demand and supply of a commodity increase by an equal absolute amount, the market price will not increase, rather it will remain stable.

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While estimating the national income, the problem of double counting occurs when the value of some goods and services are counted more than once. Cotton output and cotton cloth output both the raw material and the final result are counted.

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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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The Reserve Bank of India can use credit rationing to limit money supply. Credit rationing is a monetary policy tool of RBI. Progressive taxation and public sector expenditure are managed by the Government of India as fiscal policy. Regulation of foreign direct investment flows is also executed by the government. RBI and government use separate policy instruments for inflation control.

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Progressive taxation is based on the principle of ability to pay, with higher earners paying higher tax rates. It aims to reduce income inequality and can incorporate administrative efficiency. Encouraging work and investment incentives is not a core principle, as progressive taxes may reduce such incentives at higher income levels.

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Keynes and E. F. Schumacher proposed the Bancor as a supranational currency between 1940–1942. The International Clearing Union was suggested to manage its use in global trade. The Bancor proposal was presented by the United Kingdom at the Bretton Woods Conference in 1944. The concept was intended to prevent persistent surpluses or deficits among countries. The Bancor was not adopted; instead, the U.S. dollar was chosen as the main reserve currency.

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The National Social Assistance Programme was launched in 1995 during 8th five year plan as a Centrally Sponsored Scheme of the Government of India. The scheme provides financial assistance to the elderly, widows and persons with disabilities in the form of social pensions.

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Narrow money is the most liquid part of the money supply because the demand deposits can be withdrawn anytime during the banking hours. Time deposits on the other hand have a fixed maturity period and hence can not be withdrawn before expiry of this period. When we add the time despots into the narrow money, we get the broad money, which is denoted by M3. M3 = Narrow money + Time Deposits of public with banks Here, you must note that Broad money does not include the interbank deposits such as deposits of banks with RBI or other banks. At the same time, time deposits of public with all banks including the cooperative banks are included in the Broad Money. When you add the Post Office Savings money also into the M3, it becomes M4.

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Implementation of Goods and Services Tax (GST) could help government raise tax revenues and reduce fiscal deficit. Fiscal deficit can be reduced by rationalizing subsidies in different sectors. Reduction in Income Tax will reduce government’s earnings and hence will increase budget deficit.

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The Engine Division of Hindustan Aeronautics Limited at Sunabeda, near Koraput, Odisha, was established in 1964. It manufactures engines for MiG fighter aircraft, including R11, R25, R29B, and RD-33 series. Since 2007, the facility has produced RD-33 engines for MiG-29 aircraft under license from Russia. Over 1,300 engines have been manufactured at this division.