Indian Economy MCQs

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The Balance of International payments or Balance of Payments refers to the systematic and summary record of a country’s economic and financial transactions with the rest of the world, over a period of time.
The three main components of BoP are Current Account, Capital Account and Official Reserve Transactions

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Commercial banks are called creators of money because when they sanction loans, they credit the borrower’s account with a fresh deposit. This creates new bank money and increases the money supply. In modern economies, bank lending is an important source of deposit creation, while cash reserves and existing deposits are not simply transferred from one person to another. The key point is that lending by commercial banks expands deposits through the banking system.

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Sweat equity shares are offered to employees or directors for their work or know-how, as per Section 54 of the Companies Act, 2013. Such shares are issued to retain and attract skilled personnel by granting ownership stakes without immediate cash outflow. SEBI regulates sweat equity issuance for listed companies. Companies often use sweat equity during initial stages to incentivize and retain employees without cash expenditure.

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Miadi Hundi, also known as Muddati Hundi, is payable after a specified period. A usance bill of exchange is a negotiable instrument also payable after a certain period, not on demand. Unlike Darshani Hundi, which is payable at sight, Miadi Hundi and usance bills both provide deferred payment terms for commercial transactions.

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Both statements are correct. The G-sec market does witness speculative activities, including margin trading and short-term trades, often leading to price volatility. Furthermore, institutional investors such as banks, insurance companies, and pension funds are the predominant participants in the G-sec market, holding and trading most government securities for liquidity and investment purposes.

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The tertiary industry is the segment of the economy that provides services to its consumers, including a wide range of businesses such as financial institutions, schools and restaurants. It is also known as the tertiary sector or service industry/sector.

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An Indian Depository Receipt (IDR) is a financial instrument denominated in Indian Rupees, issued by a domestic depository against the equity shares of a foreign company. IDRs are listed and traded on Indian stock exchanges. The concept was introduced under Section 605A of the Companies Act, 1956 and regulated by SEBI. The first IDR was issued by Standard Chartered PLC in 2010.

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Foreign Portfolio Investment (FPI) refers to investment by foreign investors in financial assets such as shares, bonds and other securities in India. Such investment is generally made without seeking management control over the company. This is different from Foreign Direct Investment (FDI), which involves a lasting interest and often some degree of control in the enterprise. Hence, foreign investment in listed shares and bonds is classified as FPI.

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Market price(MP)refers to the actual transacted price and includes indirect taxes. The market price is the current price at which an asset or service can be bought or sold. The economic theory contends that the market price converges at a point where the forces of Supply and demand meet.

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In a Mixed Economic system both the profit-making as well as social welfare is the motive. The government interferes where social justice is to be provided whereas in other sectors the profit motive will be driving force of the economy.