Indian Economy MCQs

Notes:
Planning Commission was set up by a Government of India Resolution in 1950 as an advisory and specialized institution. It was charged with the responsibility to formulate a strategy of development for independent India in a long-term perspective and for making assessment of all resources of the country, augmenting deficient resources, formulating plans for the most effective and balanced utilization of resources and determining priorities.

Notes:
Urea is a white crystalline solid containing about 46% nitrogen. Urea is widely used as a fertilizer and animal feed additive in agriculture. No other solid fertilizer has a higher nitrogen content than urea. Ammonium nitrate contains about 34% nitrogen, calcium ammonium nitrate about 26%, and calcium nitrate about 15.5% nitrogen.

Notes:
The correct answer is “Lowering reserve requirements / increasing volume of reserves”, because lowering reserve requirements allows banks to lend a larger proportion of their deposits, thereby increasing the money multiplier, while increasing the volume of reserves gives banks more funds to create loans and deposits; together, these actions expand the deposit component of the money supply.

Notes:
The correct answer is “State Government 100%.” In India, stamp duty on promissory notes is governed by the Stamp Act of 1899, which allows state governments to levy stamp duty. Each state has the authority to set its own rates, and the revenue collected from stamp duty is retained entirely by the state government. This is a important source of revenue for states, contributing to their financial resources for development and public services.

Notes:
Cash Reserve Ratio (CRR) is a quantitative instrument set by the Reserve Bank of India under Section 42(1) of the RBI Act, 1934. CRR mandates banks to keep a percentage of deposits with RBI in cash. It controls the total volume of credit by affecting banks’ lending power. Qualitative credit control instruments in India include moral suasion, credit rationing, and margin requirements.

Notes:
An increase in any of the reverse repo rate, cash reserve ratio, statutory liquidity ratio, or bank rate reduces liquidity or increases borrowing costs for banks, leading to higher market interest rates. All four are contractionary monetary tools used by central banks to moderate inflation and control credit growth by tightening monetary conditions.

Notes:
Chetan Bhagat worked as an investment banker at Goldman Sachs and Deutsche Bank in Hong Kong for about 11 years. He graduated from IIT Delhi in 1995 and IIM Ahmedabad in 1997. Bhagat wrote his first novel, Five Point Someone, while still an investment banker. He left banking after publishing his third novel in 2008.

Notes:
EEFC accounts are non-interest bearing current accounts maintained by authorized dealer (Category-I) banks following RBI regulations. These do not earn interest and require no minimum balance. Such accounts are not held directly with RBI but through authorized dealers. Therefore, only statement 4 is correct as per current RBI rules.

Notes:
The World Economic Forum published the Global Competitiveness Report annually from 2004 to 2020. The report used the Global Competitiveness Index to assess countries’ economic fundamentals, institutions, and policies. The Global Competitiveness Report was discontinued after 2020 and is not currently published by any organization.

Notes:
Mixed Banking is the system in which banks undertake activities of commercial and investment banking together.

• These banks give short-term and long-term loans to industrial concerns.
• The banks appoint experts which give valuable advice on various financial issues and also help gauge the financial health of companies.
• Industries don’t have to run to different places for differential financial needs.
• They thus promote rapid industrialization.
• They may however pose a grave threat to liquidity of a bank and lead to bad debts.