Indian Economy MCQs

Notes:
It is a much traded Cotton variety. Some other varieties are:

• Suvin – Known for its long staple length and premium quality, it is a hybrid of Egyptian and Indian cotton.
• DCH-32 – A hybrid cotton known for its extra-long staple.
• Bunny – A high-yielding variety of cotton.
• Jaydhar – An indigenous variety grown mainly in Maharashtra.
• LH-1556 – A hybrid variety, often grown in Northern India.
• Varalaxmi – A hybrid variety popular in South India.
• Shankar-4 – Similar to Shankar-6, this variety is also known for its medium staple cotton.
• Mech-184 – A genetically modified (Bt) cotton variety.

Notes:
The National Rural Credit stabilization fund is a sector specific finds maintained with National Bank for Agriculture and Rural Development. This fund includes contributions from Central and State Governments, sums contributed by RBI and the sums contributed by NABARD’s board every year.

Notes:
Commercial banks create money when issuing loans by crediting the borrower’s account with new deposits, thus increasing the money supply. This accounts for over 90% of money creation in modern economies, as seen in the period 2001-2020. The process operates under central bank monetary policies and reserve requirements. The bank records loans as assets and matching deposits as liabilities, expanding broad money aggregates such as M1 to M4 without needing prior cash deposits.

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The Khadi and Village Industries Commission is a statutory body formed in April 1957 by the Government of India, under the Act of Parliament, ‘Khadi and Village Industries Commission Act of 1956’. It was second five year plan period then.

Notes:
The Commission for Agricultural Costs and Prices (CACP) was established in January 1965 as the Agricultural Prices Commission and renamed CACP in 1985. CACP functions as an attached office under the Ministry of Agriculture and Farmers Welfare. CACP annually recommends MSPs for 22-23 crops to the government. Its recommendations consider factors such as production costs, market prices, and inter-crop price parity.

Notes:
James Tobin proposed the Tobin tax in 1972 as a tax on international foreign exchange transactions. The proposal followed the end of dollar convertibility to gold and adoption of floating exchange rates. Tobin suggested tax rates between 0.1% and 1% on currency conversions. The original focus was specifically on foreign exchange markets to curb currency speculation and exchange-rate volatility.

Notes:
The Reserve Bank of India regulates foreign currency accounts and remittances for Indian residents. RBI acts under the Foreign Exchange Management Act, 1999 and the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2015. Amendments until 2025 empower RBI to set conditions for outward and inward remittance and opening of overseas bank accounts. RBI issues notifications for compliance with FEMA rules.

Notes:
Competitive devaluation refers to countries deliberately reducing their currency value to make exports cheaper. When multiple countries do this, the benefit to any one country’s exporters is reduced, harming their export competitiveness. In recent years, central banks have intervened to devalue currencies, impacting exporters most. Exporters lose price advantage if other nations devalue simultaneously. The phenomenon is termed a currency war.

Notes:
Currency depreciation makes exports cheaper and imports costlier, reducing trade deficits. Many developing countries use depreciation to ease repayment burdens of foreign currency debt. The Asian Financial Crisis of 1997 saw multiple countries devalue currencies to manage debt. Currency devaluation has been used by China and Argentina to address trade imbalances. Such policies are often monitored by the International Monetary Fund.

Notes:
First option is the correct answer
Countervailing duty is a tariff imposed on imported goods to offset the subsidies offered by the exporting country to its producers. It is imposed to provide level playing field to domestic producers and foreign producers.