Indian Economy MCQs

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India’s First Five-year Plan was implemented from the year 1951 till 1956. It mainly focused on the development of primary sector. The Plan was based on the Harrod–Domar model implemented with some modifications.

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Net National Product at Factor Cost generally denotes National Income.

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The Laffer curve is a theoretical concept in economics that illustrates the relationship between tax rates and government revenue. The curve is named after economist Arthur Laffer, who popularized the concept in the 1970s. The basic idea behind the Laffer curve is that there is a certain tax rate that will maximize government revenue. At a 0% tax rate, the government will obviously not collect any revenue. At a 100% tax rate, the government will also not collect any revenue because people will have no incentive to work. The Laffer curve suggests that there is a point in between these two extremes where the government will collect the most revenue. The exact shape and location of the Laffer curve will vary depending on various factors, such as the state of the economy and the efficiency of the government’s tax collection system.

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Cost Push Inflation occurs when production costs rise, leading to increased prices. 1. True: It is indeed driven by rising costs like wages and rent. 2. False: It is generally harder to control than Demand Pull Inflation, as it often involves external factors (e.g., oil price shocks). 3. True: As prices rise, the purchasing power of currency decreases. Thus, statements 1 and 3 are correct.

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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 banks can borrow from the RBI on the basis of eligible securities or any other arrangement and at the time of need or crisis, they approach RBI for financial help. Thus RBI works as Lender of the Last Resort (LORL) for banks.

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Stagflation, as you might know is a condition when economy isn’t growing but prices are. So, this option would be opted out. Next two are disinflation and deflation. Disinflation means rise in prices has slowed down significantly as compared with the previous year. This simply implies that prices don’t fall during disinflation also. Deflation is when the prices actually fall. Kindly note that deflation usually moves hand in hand with economic slowdown, lower productivity and loss of employments.

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MENA refers to Middle East and North Africa. The population is some 381 million equal to 6% of the total world population, if we consider all the countries included commonly. Obviously, Petroleum is the major industry.

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Rolling plan is a plan which is designed to continue over a period of time and is subject to regular review and updating. 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.
The main advantage of the rolling plans is that they are flexible. They are able to overcome the rigidity of fixed five year plans by revising targets, projections and allocations as per the changing conditions in the country’s economy.

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Conventional energy directly means the energy source which is fixed in nature like oil, gas and coal. In other words conventional energy is also termed as non-renewable energy sources. Their use leads to increased greenhouse gas emissions and other environmental damage. Hydropower is a conventional source of energy.