Indian Economy MCQs

Notes:
Caste-based social discrimination in India is classified as a social, not economic, factor. The caste system leads to social exclusion and restricts access to education and jobs for marginalized groups such as Scheduled Castes and Scheduled Tribes. Social discrimination originates from traditional societal structures and legal history, rather than economic variables like production levels, employment rate, or population growth.

Notes:
The correct answer is “Broad Money.” M3 is a measure of the total money supply in an economy, including cash, demand deposits, and easily convertible near money. It encompasses all liquid and near-liquid assets, making it a comprehensive indicator of money available for spending and investment. M3 is often used by central banks to gauge economic health and inform monetary policy.

Notes:
Qualitative or selective methods of credit control refers to those methods which limit the nature or variety of money supply rather than its quantity. Such methods include regulation of margin requirement, credit rationing, regulation of consumer credit and direct action. Open Market Operations is a quantitative method of credit control.

Notes:
Portfolio investments comprise financial assets such as stocks, bonds, and depository receipts. Foreign Institutional Investments (FII), American Depository Receipts (ADR), and Global Depository Receipts (GDR) are all considered portfolio investments because they do not confer direct control over the underlying asset or enterprise, whereas Foreign Direct Investments involve ownership and control, and are not part of portfolio investment.

Notes:
The Reserve Bank of India introduced the Market Stabilisation Scheme (MSS) in 2004. The RBI issues Treasury Bills and/or dated securities under MSS to absorb excess liquidity from the banking system. The funds raised are kept in a separate account and not used for government expenditure. The scheme helps manage surplus liquidity arising mainly from large capital inflows or currency management operations.

Notes:
The first Bank with Limited Liability to be managed by Indian Board was Oudh Commercial Bank. It was established in 1881 at Faizabad. This bank failed in 1958. The first bank purely managed by Indians was Punjab National Bank, established in Lahore in 1895

Notes:
The FRBM Act, 2003 mandated elimination of revenue deficit, reduction of fiscal deficit to 3% of GDP, and limitation of government guarantees. The Act did not stipulate complete elimination of the primary deficit as a statutory target. The focus was on fiscal and revenue deficit reduction. The 2018 amendment revised several targets but did not mandate elimination of the primary deficit as a statutory requirement.

Notes:
Forward guidance was widely adopted after the 2008 global financial crisis. The Federal Reserve began explicit forward guidance in 2011. The European Central Bank used this tool in 2013. The Bank of Japan started using forward guidance in 2013. Forward guidance aims to influence market expectations about future monetary policy. It became prominent when policy rates approached zero, limiting conventional monetary tools.

Notes:
According to FERA ,1973 Foreign Exchange means Foreign Currency, which includes: Any Draft Traveller’s Cheque Letters of Credit Bill of Exchange expressed in Indian Currency but payable in Foreign Currency

Notes:
The Janta Government terminated the fifth five year plan in 1977-78 and launched its own sixth five year plan for period 1978-83 and called it a Rolling Plan. This second plan is kept changing as per the requirements of the economy (and politics).