Indian Economy MCQs

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The Planning Commission was set up by a Cabinet Resolution of the Government of India in March 1950. Jawaharlal Nehru was the first Chairman of the Planning Commission. It had the responsibility to formulate plans to utilize the available resources.

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Interest rate risk is a type of market risk. It’s the risk that the value of a bond or other fixed-income investment will decrease due to changes in interest rates. Interest rate risk can be avoided or eliminated.
Interest rate risk occurs when interest rates in an economy change. This can impact the interest rate on fixed-income securities. The risk is that the interest paid on a fixed-income security will decrease, resulting in a smaller payout to the investor. The bond with the longest maturity and lowest coupon rate has the highest interest rate risk.

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In progressive taxation, the tax liability increases with individual or entity income. This is based on principle of “ability to pay”. Under this system, lowest income people are generally exempted while highest income people pay highest taxes. Income Tax is thus an example of progressive tax. Progressive taxation results in redistribution of income from rich to poor.

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Trombay, Nangal, and Sindri are famous for fertilizers. The first fertilizer plant was established in Sindri, Jharkhand. Fertilizers are materials that are applied to soil or plant tissue to provide nutrients for plant growth. They can be natural or synthetic in origin.  Trombay is located in Maharashtra. Nangal is a town in Punjab, India. Sindri is a neighborhood in Dhanbad, Jharkhand.

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The Balance of Payments (BOP) crisis struck India in 1991. This triggered an economic crisis due to escalating oil prices, inflation and low foreign exchange reserves, which beleaguered India’s ability of import payments. Repercussions included severe rupee devaluation. The crisis incited economic liberalization, lowering of import tariffs and eased foreign exchange restrictions. With help from International Monetary Fund and other organizations, India managed to stabilize its situation, highlighting the necessity for constant economic overhauls to sustain financial equilibrium.

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The “Service Area Approach” was introduced in 1989 by the Reserve Bank of India to enhance rural lending. It aimed to allocate specific geographical areas to banks, ensuring that credit and financial services reached underserved rural populations. This strategy was part of broader efforts to promote financial inclusion and support rural development, addressing the needs of agriculture and small enterprises.

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The Reserve Bank of India (RBI) was empowered to regulate the money, foreign exchange, government securities, and gold-related securities markets in 2006. This was part of the amendments made to the Reserve Bank of India Act, 1934, which aimed to enhance the regulatory framework and improve market efficiency. The move was important in promoting financial stability and transparency in India’s financial markets.

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The bank act as a trustee to the person as the person is withdrawing his own money; he is neither taking loan nor depositing money for fixed duration to bank, for him to be debtor or creditor.

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World economic forum publishes the global competitiveness report annually.

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This question is based upon last year’s Economic Survey documents. It is based on the premise that the growth in tertiary sector cannot thrive if there is no growth in primary and secondary sector. Due to inter-sectoral linkages; revival of growth in services depends on growth revival in commodity producing sectors.