Indian Economy MCQs
21. The Laffer curve is the graphical representation of :
[A] The relationship between tax rates and absolute revenue these rates generate for the government.
[B] The inverse relationship between the rate of unemployment and the rate of inflation in an economy.
[C] The inequality in income distribution
[D] The relationship between environmental quality and economic development.
Show Answer
Correct Answer: A [The relationship between tax rates and absolute revenue these rates generate for the government.]
Notes:
In economics, the Laffer curve is a hypothetical representation of the relationship between government revenue raised by taxation and all possible rates of taxation. It is used to illustrate the concept of taxable income elasticity – that taxable income will change in response to changes in the rate of taxation.
22. What is the upper limit of transaction of amount via NEFT to a person in Nepal via the Indo-Nepal Remittance Facility Scheme?
[A] Rs. 50,000
[B] Rs. 100,000
[C] Rs. 200,000
[D] Rs. 500,000
Show Answer
Correct Answer: A [Rs. 50,000]
Notes:
Indo-Nepal Remittance Facility is a cross-border remittance scheme to transfer funds from India to Nepal, enabled under the NEFT Scheme. The scheme was launched to provide a safe and cost-efficient avenue to migrant Nepalese workers in India to remit money back to their families in Nepal. A remitter can transfer funds up to Indian Rupees 50,000 (maximum permissible amount) from any of the NEFT-enabled branches in India..The beneficiary would receive funds in Nepalese Rupees.
23. Devaluation of currency can correct a Balance of Payments deficit because___
[A] It lowers price of exports in foreign currency and rises price of imports in home currency
[B] It raises price of exports in foreign currency and lowers price of imports in home currency
[C] It raises price of exports and imports in foreign currency
[D] It lowers price of exports and imports in home currency
Show Answer
Correct Answer: A [It lowers price of exports in foreign currency and rises price of imports in home currency]
Notes:
Devaluation refers to fall in the fixed exchange rate between one currency and other. Devaluation is used to correct the balance of payment (BoP) deficit but only as a last resort as it has major repercussions on the domestic economy. Devaluation can correct a BoP deficit because it lowers the price of experts in terms foreign currencies and raise the price of imports on the home market
24. Round tripping is used as a ___?
[A] Policy to boost FDI in country
[B] Means of tax evasion
[C] Policy of export promotion
[D] Calculation of National Income
Show Answer
Correct Answer: B [Means of tax evasion]
25. What is the share of Government of India in NABARD?
[A] 50%
[B] 51%
[C] 75%
[D] 99%
Show Answer
Correct Answer: D [99%]
Notes:
The National Bank for Agriculture and Rural Development (NABARD) was established in 1982. RBI had sold its stake and now the Government of India (GOI) has 99 percent in it. It was established to provide credit for the promotion of the agriculture, SSI and Cottage and village industry. It is an apex bank for agriculture. Its finances are available to SLDBs, SCBs (state cooperative banks), scheduled commercial banks, and RRBs. It can take loans for GOI, World Bank, and Asian development bank (ADB).
26. In which year Food Safety and Standards Act was enacted in India?
[A] 2004
[B] 2005
[C] 2006
[D] 2007
Show Answer
Correct Answer: C [2006]
Notes:
The Food Safety and Standards Act was passed in 2006 but came into force in 2011.
27. Maximum share in total external debt of India is of ___
[A] Long-term borrowings
[B] Short Term Borrowings
[C] Medium Term Borrowings
[D] Ultra-Long term borrowings
Show Answer
Correct Answer: A [Long-term borrowings]
28. Reserve Tranche Position (RTP) is a term used in context with ____?
[A] Reserve Bank of India
[B] Federal Reserve Bank (of America)
[C] World Bank
[D] International Monetary Fund
Show Answer
Correct Answer: D [International Monetary Fund]
29. If you go to the market and purchase an Air conditioner for your factory, then in economic terminology, you are most probably doing which among the following?
[A] Consumption
[B] Production
[C] Asset Creation
[D] Investment
Show Answer
Correct Answer: A [Consumption]
Notes:
Consumption, however asset creation is also correct (fixed asset
30. Which among the following programmes is NOT being implemented in India with assistance of World Bank?
[A] National Vector Borne Disease Control and Polio Eradication
[B] National Rural Livelihoods Project
[C] PMGSY Rural Roads Project
[D] Delhi Mumbai Industrial Corridor Project
Show Answer
Correct Answer: D [Delhi Mumbai Industrial Corridor Project]
