Indian Economy MCQs

Notes:
Market-wide circuit breakers in the United States are triggered if the S&P 500 Index falls by 7%, 13%, or 20% from the previous day’s closing value. Level 1 and Level 2 trigger 15-minute trading halts if before 3:25 p.m. A Level 3 decline causes trading to be halted for the remainder of the day. Circuit breakers were introduced in 1988 after the 1987 Black Monday crash.

Notes:
Gini coefficient represents the income distribution of a country’s residents. It was developed by the Italian statistician and sociologist Corrado Gini. It measures the inequality. The coefficient ranges from zero to one, with zero representing perfect equality and one showing perfect inequality. The higher is the Gini Coefficient, more is gap between rich and poor in a country. If the value of Gini Coefficient is 1, it implies that all wealth of that country belongs to one person and everybody else is poor. The 0 value of Gini Coefficient implies that all people have exactly equal wealth. Practically, the Gini Coefficient value falls between 0 and 1 for all the countries.

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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.

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An accession tax is levied on individuals based on all gifts and inheritances received during their lifetime. The tax applies to the cumulative total rather than to the estate of the deceased. Accession tax rates generally increase as the total value of received gifts and bequests rises. This system differs from estate tax or inheritance tax models.

Notes:
The correct answer is “Base Rate.” The Base Rate is the minimum interest rate set by a bank for lending to its customers. It serves as a benchmark for various loans and is influenced by factors like the central bank’s policy rate and the bank’s cost of funds. The Base Rate ensures that banks cover their costs and maintain profitability while lending. In many countries, including India, the Base Rate is a crucial component of monetary policy and financial stability.

Notes:
Statements 1 and 2 are correct: Rashtriya Arogya Nidhi offers up to Rs. 15 lakh for poor patients with life-threatening diseases, provided treatment is availed in government hospitals only. Statement 3 is incorrect; individuals working in Central/State Government or PSUs are not eligible for assistance under this scheme, as per official guidelines.

Notes:
Dividend is the portion of profits that a company distributes among its shareholders in the form of cash. Usually it is expressed per share. In some cases it is expressed as a percentage of the share’s face value. So if your company declares a 100% dividend, you will get an amount equal to the face value of the share and not equal to its market price. When dividend is expressed in percentage terms, it is the face value that is referred to. The same holds good when it comes to dividends declared by mutual funds — it is the par value of units that is considered — which usually stands at Rs 10.

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Microeconomic variables are those patterns or elements that can be used to describe the behavior of a person or an individual economic unit, like a business. Eg. Consumer’s Equilibrium.

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Section 42 of the Reserve Bank of India Act, 1934 mandates scheduled banks to maintain their cash reserve ratio (CRR) with the RBI. The Reserve Bank of India monitors and enforces this statutory reserve requirement on the basis of net demand and time liabilities. The minimum CRR is set by the RBI and is periodically revised. RBI issues directions and circulars related to CRR compliance.

Notes:
The short-term debts and securities sold on the money markets—which are known as money market instruments—have maturities ranging from one day to more.