Indian Economy MCQs

Notes:
Complementary goods, defined by their negative cross elasticity of demand, are products whose demand is influenced by one another. When the price of a good declines, the demand for its complementary good rises. Printers need ink cartridges, tea is often consumed with sugar, and mobile phones require SIM cards for operation. However, tea and coffee are substitutes, not complements, as they are consumed separately and often in place of one another, hence they are not complementary goods.

Notes:
Inflation refers to rise in general price level of goods and services, deflation is fall in general price level of goods and services. Deflation is inflation in negative zone, i.e. a decrease in the general price level of goods and services.

Notes:
Circuit breakers are pre-defined values in percentage terms, which trigger an automatic check when there is a runaway move in any security or index. It may involve Halting of trade in a security or index for a certain period or Halting of trade in a security or index for the entire trading day.

Notes:
Organization of the Petroleum Exporting Countries (OPEC) is estimated to account for around 40-45% of total global oil exports currently. In 2021, OPEC’s share of global oil exports was around 43%. As of 2022, it was around 40% of global oil exports.

Notes:
The “Soft Loan Window” of the World Bank is commonly referred to as the International Development Association (IDA). It was founded in 1960 and provides low or zero-interest loans and grants to the world’s poorest countries. These “soft” loan terms allow for improved economic development and poverty reduction. Unlike the World Bank, the IDA seeks to reduce poverty by providing loans to developing countries for programs that are intended to boost economic growth and improve living conditions.

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The easy credit to all citizens with “subsidies guaranteed” can not be an agenda of financial sector reforms. Subsidies are provided to weaker sections of the society.

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The “Service Area Approach” was introduced in 1989 by the Reserve Bank of India to enhance rural lending. It aimed to allocate specific geographical areas to banks, ensuring that credit and financial services reached underserved rural populations. This strategy was part of broader efforts to promote financial inclusion and support rural development, addressing the needs of agriculture and small enterprises.

Notes:
When an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to the public, it is called Initial Public Offering or IPO. In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), the best offering price and the time to bring it to market.

Notes:

• Revenue deficit refers to the excess of revenue expenditure over revenue receipts.
• Effective revenue deficit is the difference between revenue deficit and grants for creation of capital assets.
• Fiscal deficit is the difference between the revenue receipts plus non-debt capital receipts and the total expenditure including loans, net of repayments. This indicates the total borrowing requirements of Government from all sources.
• Primary deficit is measured by fiscal deficit less interest payments.

Notes:
The primary difference between a free trade area and a customs union is that members of a customs union adopt a common set of external trade barriers. In a free trade area, member countries eliminate tariffs among themselves but maintain their own external tariffs. Examples include NAFTA (now USMCA) as a free trade area and the European Union as a customs union, which has a unified external tariff policy.