Indian Economy MCQs

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A complementary commodity is the one which is used along with another commodity. When the price of a particular commodity rises, it will induce a fall in demand of another commodity. This is because consumers may not prefer to buy only the complement.

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Entertainment tax is levied by state government only. Now it has been subsumed under Goods and Service Tax by 101st Amendment to the Indian Constitution.

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The FDI trigger list in India includes investors with suspected illegal sources of funds or linkages, as well as sensitive areas like aviation and telecommunications, and sensitive locations such as Jammu & Kashmir. This scrutiny is part of India’s efforts to safeguard national security and economic interests. The Foreign Direct Investment (FDI) policy is regulated by the Department for Promotion of Industry and Internal Trade (DPIIT) in India, which aims to attract foreign investment while ensuring compliance with national regulations.

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Demand-pull inflation refers to the inflation from rapid growth in aggregate demand and when excess demand causes ‘too much money chasing too few goods.’ This generally happens when an economy is growing at a faster rate.

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The correct answer is “India, Mexico, South Africa.” As of recent data, India is one of the largest borrowers from the World Bank, primarily for development projects. Mexico also has important loans for infrastructure and social programs. South Africa has received funding for various initiatives, including poverty alleviation and economic development. The World Bank’s lending is aimed at reducing poverty and promoting sustainable development in these countries.

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Cartelization primarily refers to a practice where large traders collude to control prices, limit production or hinder competition. It’s considered an illegal act in numerous countries as it fundamentally undermines free market principles. A well-known instance of a cartel is the Organization of the Petroleum Exporting Countries (OPEC), which dictates oil production among its members to sway prices. The existence of cartels often leads to inflated prices for consumers and diminishes overall market efficiency.

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The Trade and Economic Relations Committee (TERC) in India is headed by the Prime Minister. This committee was established to enhance India’s trade relations and economic policies, reflecting the government’s focus on international trade as a key driver of economic growth. The Prime Minister’s leadership underscores the importance of trade in India’s economic strategy.

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Commercial Paper (CP) is an unsecured money market instrument issued in the form of a Promissory Note. It is typically used by corporations to raise short-term funds, with maturities ranging from a few days to up to 270 days. CP is not backed by collateral and is sold at a discount to face value, making it a popular choice for companies seeking quick liquidity. The first CP was issued in the United States in 1980, and it has since become a key component of the money market.

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Regional Rural Banks have a target of 75 per cent of their outstanding advances for priority sector lending, and at present has the highest priority sector lending norms in India. For Foreign banks with more than 20 branches PSL norm is 40%.