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Budget and the Economy Test - 7

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Budget and the Economy Test - 7
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Weekly Quiz Competition
  • Question 1
    1 / -0.25

    Directions: In the following questions, a statement of assertion (A) is followed by a statement of reason (R). Mark the correct choice as:

    Assertion (A): Fiscal deficit is measured in terms of borrowings.

    Reason (R): External borrowings increase the Fiscal deficit.

    Solution

    Fiscal Deficit refers to the excess of total expenditure over total receipts excluding borrowings. It indicates borrowing requirements of the government.

  • Question 2
    1 / -0.25

    Directions: In the following questions, a statement of assertion (A) is followed by a statement of reason (R). Mark the correct choice as:

    Assertion (A): Revenue deficit includes capital receipts and capital expenditure.

    Reason (R): Revenue deficit is related to revenue expenditure and revenue receipts of the government.

    Solution

    Revenue Deficit refers to the excess of total revenue expenditure over total revenue receipts. It means that the government. will not be able to meet its revenue expenditure from its revenue receipts.

  • Question 3
    1 / -0.25

    Directions: In the following questions, a statement of assertion (A) is followed by a statement of reason (R). Mark the correct choice as:

    Assertion (A): Budget shows monetary policy of the government.

    Reason (R): Policy adopted by the Central Bank of an economy in the direction of credit control or money supply is known as Monetary Policy.

    Solution

    Budget shows fiscal policy of the government for the year to come.

  • Question 4
    1 / -0.25

    Directions: In the following questions, a statement of assertion (A) is followed by a statement of reason (R). Mark the correct choice as:

    Assertion (A): Fiscal deficit is the difference between primary deficit and interest payment.

    Reason (R): Fiscal deficit is the sum total of primary deficit and interest payment.

    Solution

    Fiscal Deficit refers to the excess of total expenditure over total receipts excluding borrowings. It indicates borrowing requirements of the government.

  • Question 5
    1 / -0.25

    Directions: In the following questions, a statement of assertion (A) is followed by a statement of reason (R). Mark the correct choice as:

    Assertion: This new Green Revolution is leading to foreign ownership over most of India's farmland, undermining farmers' interests.

    Reason: The New Green Revolution is driven by private (and foreign) interest—notably MNCs like Monsanto.

    Solution

    This new Green Revolution, she says, is driven by private (and foreign) interest—notably MNCs like Monsanto—as encouraged by the neoliberal context. Ultimately, this is leading to foreign ownership over most of India's farmland, undermining farmers' interests.

  • Question 6
    1 / -0.25

    Directions: In the following questions, a statement of assertion (A) is followed by a statement of reason (R). Mark the correct choice as:

    Assertion (A): the industries became more diversified during 1950-90 as compared to the situation at the time of independence.

    Reason (R): Excessive government regulation prevented industrial growth during this period.

    Solution

    The proportion of GDP contributed by the industrial sector increased in the period from 11.8 per cent in 1950-51 to 24.6 per cent in 1990-91. The progress of the Indian economy during the first seven plans was impressive indeed.

    Our industries became far more diversified compared to the situation at independence. India became self- sufficient in food production thanks to the green revolution.

  • Question 7
    1 / -0.25

    Directions: In the following questions, a statement of assertion (A) is followed by a statement of reason (R). Mark the correct choice as:

    Assertion (A) : The term modernisation indicates a variety of structural and institutional changes in the framework of economic activity.

    Reason (R) : An advancement of technology and institutional innovations as well as shift in sectoral composition of production and diversification of activities.

  • Question 8
    1 / -0.25

    Directions: In the following questions, a statement of assertion (A) is followed by a statement of reason (R). Mark the correct choice as:

    Assertion (A): Economic planning rules out the free play of market force.

    Reason (R): It does not rule out free play of market forces rather it is dependent on a model of economic planning.

    Solution

    The free market is an economic system based on supply and demand with little or no government control. It is a summary description of all voluntary exchanges that take place in a given economic environment. Free markets are characterized by a spontaneous and decentralized order of arrangements through which individuals make economic decisions. Based on its political and legal rules, a country's free market economy may range between very large or entirely black market.

  • Question 9
    1 / -0.25

    Directions: In the following questions, a statement of assertion (A) is followed by a statement of reason (R). Mark the correct choice as:

    Assertion: (A): Tariffs and quotas in the economic policy post-Independence were used to assist domestic industries.

    Reason ( R): Our planners wanted to use foreign exchange for importing luxury goods.

    Solution

    Tariffs and quotas are both ways for governments to protect domestic firms and industries. Both of these economic trade tactics ultimately lead to higher prices of goods and fewer choices or quantity of imported goods for the consumer. Because of higher prices, consumers ultimately can buy fewer goods and services.

  • Question 10
    1 / -0.25

    Directions: In the following questions, a statement of assertion (A) is followed by a statement of reason (R). Mark the correct choice as:

    Assertion (A): Modernisation as a planning objective does not create contradiction in the light of employment generation.

    Reason (R): Modernisation is related not only to modern technique but also relates to change in outlook.

    Solution

    No, modernisation as a planning objective does not contradict employment generation. In fact both modernisation and employment generation are positively correlated. While modernisation refers to the use of new and modern technology in production process that may make some people lose their jobs in the initial stages. But gradually, the use of modern technology and input will raise the productivity and, consequently, the income of the people that will further raise the demand for goods and services. In order to fulfill this increased demand, there will be more job opportunities that will lead more people to be hired and, hence, more employment opportunities will be generated. Hence, both modernisation and employment generation are not contradictory but are complementary to each other.

  • Question 11
    1 / -0.25

    Directions: In the following questions, a statement of assertion (A) is followed by a statement of reason (R). Mark the correct choice as:

    Assertion (A): In 1955, the Village and Small -Scale Industries Committee, also called the Karve Committee, noted the possibility of using small-scale industries for promoting rural development.

    Reason (R): A small scale industry is defined with reference to the maximum investment allowed on the assets of a unit.

    Solution

    A small scale industry is defined with reference to the maximum investment allowed on the assets of a unit. This limit changes over a period of time. In 1950, a small scale industrial unit was one which invested a maximum of Rs. 5 lakhs, at present the maximum investment allowed is Rs. one crore.

  • Question 12
    1 / -0.25

    Directions: In the following questions, a statement of assertion (A) is followed by a statement of reason (R). Mark the correct choice as:

    Assertion (A): A good indicator of economic growth is steady increase in Gross domestic product (GDP).

    Reason (R): GDP is the market value of all goods and services produced in a country during a year

    Solution

    Economists usually measure economic growth in terms of gross domestic product (GDP) or related indicators, such as gross national product (GNP) or gross national income (GNI) which are derived from the GDP calculation. GDP is calculated from a country's national accounts which report annual data on incomes, expenditure and investment for each sector of the economy. Using these data it is possible to estimate the total income earned in the country in any given year (GDP) or the total income earned by a country's citizens (GNP or GNI).

  • Question 13
    1 / -0.25

    Directions: In the following questions, a statement of assertion (A) is followed by a statement of reason (R). Mark the correct choice as:

    Assertion (A): The 1956 policy continued to constitute the basic economic policy for a long time.

    Reason (R) According to this resolution the objective of the social and economic policy in India was the establishment of a socialistic pattern of society

    Solution

    Industrial Policy Resolution of 1956 (IPR 1956) is a resolution adopted by the Indian Parliament in April 1956. It was the first comprehensive statement on industrial development of India. The 1956 policy continued to constitute the basic economic policy for a long time. This fact has been confirmed in all the Five-Year Plans of India. According to this resolution the objective of the social and economic policy in India was the establishment of a socialistic pattern of society. It provided more powers to the governmental machinery.

  • Question 14
    1 / -0.25

    Directions: In the following questions, a statement of assertion (A) is followed by a statement of reason (R). Mark the correct choice as:

    Assertion (A): One of the pillars of IPR 1956 was to check concentration of economic power in a few individuals, groups or business houses.

    Reason (R): It established the public sector as the epicentre of industrialization.

    Solution

    The 1956 policy in injunction with the IDA act did just reverse of what it was supposed to do. The licensing policy of the government favoured big business houses who were in better position to raise huge amount of capital and had the better management skills to run the industry. They were also able to secure financial assistance from development and finance institutions. Further, since there was no proper system of allocation of licenses in place; pre-empting of licensing by authorities to select people or groups happened due to an array of reasons. Overall, the freedom of entry into industry was restricted due to licensing and this resulted in the concentration of economic power in few individuals.

  • Question 15
    1 / -0.25

    Directions: In the following questions, a statement of assertion (A) is followed by a statement of reason (R). Mark the correct choice as:

    Assertion (A): Capitalist economies fosters self-interest and pushes economic growth.

    Reason (R): Market economies make best use of available resources to economic growth.

    Solution

    Capitalism is often thought of as an economic system in which private actors own and control property in accord with their interests, and demand and supply freely set prices in markets in a way that can serve the best interests of society. It is this rational self-interest that can lead to economic prosperity.

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