Answer the following Objective Questions on Economics
The Government resorts to devaluation of its currency in order to promote
(1) national income
(2) international goodwill
(3) exports
(4) savings
Solution: (3)
A country devalues its currency in order to promote exports. A key effect of devaluation is that it makes the domestic currency cheaper relative to other currencies. There are two implications of devaluation. First, devaluation makes the country’s exports relatively less expensive for foreigners. Second, the devaluation makes foreign products relatively more expensive for domestic consumers, thus discouraging imports. This may help to increase the country’s exports and decrease imports, and may therefore help to reduce the current account deficit.
The basic regulatory authority for mutual funds and stock markets lies with the
(1) Government of India
(2) Reserve Bank of India
(3) SEBI
(4) Stock Exchange
Solution: (3)
The Securities and Exchange Board of India (frequently abbreviated SEBI) is the regulator for the securities market in India. SEBI has to be responsive to the needs of three groups, which constitute the market: the issuers of securities; the investors; and the market intermediaries. It is entrusted with regulating the business in stock exchanges and any other securities markets; registering and regulating the working of stock brokers, sub-brokers, share transfer agents, bankers to an issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters, portfolio managers, investment advisers and such other intermediaries who may be associated with securities markets in any manner; registering and regulating the working of [venture capital funds and collective investment schemes], including mutual funds; etc.
Identify the Navratna Company in the following
(1) ICICI Bank
(2) Infosys
(3) Air India
(4) HPCL Ltd
Solution: (4)
Navratna was the title given originally to nine Public Sector Enterprises (PSEs) identified by the Government of India in 1997 as “public sector companies that have comparative advantages”, giving them greater autonomy to compete in the global market so as to “support [them] in their drive to become global giants”. The number of PSEs having Navratna status has been raised to 16, the most recent addition being Oil India Limited. The list of such companies is: Bharat Heavy Electricals Limited; Bharat Electronics Limited; Bharat Petroleum Corporation Limited; Hindustan Aeronautics Limited; Hindustan Petroleum Corporation Limited; Mahanagar Telephone Nigam Limited; National Aluminium Company Limited; National Mineral Development Corporation Limited; Neyveli Lignite Corporation Limited; Oil India Limited; Power Finance Corporation Limited; Power Grid Corporation of India Limited; Rashtriya Ispat Nigam Limited; Rural Electrification Corporation Limited; Shipping Corporation of India Limited; GAIL (India) Limited.
What is the main function of Central Statistical Organisation (CSO) ?
(1) Determination of money supply
(2) Collection of estimates of national income
(3) Collection of detail data regarding employment
(4) Price determination
Solution: (2)
The Central Statistics Organization, established in 1951, is responsible for coordination of statistical activities in the country, and evolving and maintaining statistical standards. Its activities include National Income Accounting; conduct of Annual Survey of Industries, Economic Censuses and its follow up surveys, compilation of Index of Industrial Production, as well as Consumer Price Indices for Urban NonManual Employees, Human Development Statistics, Gender Statistics, imparting training in Official Statistics, Five Year Plan work relating to Development of Statistics in the States and Union Territories; dissemination of statistical information, work relating to trade, energy, construction, and environment statistics, revision of National Industrial Classification, etc.
What does National Income mean?
(1) The total value of all goods and services produced in the country during a period of one year
(2) The total value of all stocks and shares in the country during a period of one year
(3) The total value of all capital goods produced in the country during a period of one year
(4) The total value of all consumer goods produced in the country during a period of one year
Solution: (1)
National Income is defined as the sum total of all the goods and services produced in a country, in a particular period of time. Normally this period consists of one year duration, as a year is neither too short nor long a period. National product is usually used synonymous with National income. The Central Statistical Organization defines National income as “National Income is the sum of factor income earned by the normal residents of a country in the form of wages, rent, interest and profit in an accounting year.”
Which of the following taxes is levied by the Union and appropriated and planned by the states?
(1) Service tax
(2) Stamp duty
(3) Property tax
(4) Passenger and freight duty
Solution: (2)
The Constitution of India has a number of other provisions relevant to stamp duties. Of these, Article 246 and the Seventh Schedule are relevant in regard to the legislative power to levy Stamp duties. Article 268 states that stamp duties and such duties of excise on medicinal and toilet preparations as are mentioned in the Union List shall be levied by the Government of India but shall be collected (a) in the case where such duties are leviable within any Union Territory, by the Government of India, and (b) in other cases, by the States within which such duties are respectively leviable. It further states that proceeds in any financial year of any such duty leviable within any State shall not form part of the Consolidated Fund of India, but shall be assigned to that State.
Which of the following is the most important domestic source of planned finance ?
(1) Balance of current revenue
(2) Profit from public sector units
(3) Domestic private savings
(4) Additional taxation
Solution: (3)
Domestic saving primarily consist of three components, viz., household sector saving, private corporate sector saving and public sector saving. Household sector saving constitutes the largest portion of gross domestic saving. Household sector saving comprises saving in financial assets and saving in physical assets. Household saving in financial assets (net) is estimated as gross financial assets net of financial liabilities, while household saving in physical assets is the net addition to physical assets by the households. Gross financial saving of the household sector include the saving in the form of currency, bank deposits, non-bank deposits, saving in life insurance fund, saving in provident and pension fund, claims on government, shares and debentures inclusive of investment in mutual funds and net trade.
Consider the following reasons of continuous decline in average land-holding size in India :
A. Law of inheritance
B. Consolidation
C. Farm mechanisation
D. Desire of land ownership
Pick the correct answer from the options given below :
(1) A, B, C and D
(2) A, C and D
(3) A and D
(4) A and B
Solution: (3)
Indian agriculture is structurally small farm and small farmer based. The overall average size of operational holding in India declined from 2.63 hectares in 1960-61 to 1.33 hectares in 2002-03. Over 80% of the land holdings in India are classified as small and marginal land holdings with the farm size of less than 2 ha. This implies that over 80% of the farmers in India hold just 39% of the total cultivated land. The Law of inheritance leads to fragmentation of land among the inheritors of land. Again, desire of land ownership could also be attributed to the fragmentation of land. Owning of land is more a social status in India, than an economic exigency.
Which of the following sets belong to Central tax ?
(1) Excise duty, Sales tax and Customs duty
(2) Excise duty, Customs duty and Income tax
(3) Income tax, Customs duty and House tax
(4) Customs duty, Entertainment tax and Income tax
Solution: (2)
Some of the taxes of the central government are: Taxes on income other than agricultural income; Duties of customs including export duties; Duties of excise on tobacco and other goods manufactured or produced in India except (i) alcoholic liquor for human consumption, and (ii) opium, Indian hemp and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance; Corporation Tax; Taxes on capital value of assets, exclusive of agricultural land, of individuals and companies, taxes on capital of companies; Estate duty in respect of property other than agricultural land; etc. Central tax means taxes that are levied and collected by the central government.
Which of the following is not in the infrastructure sector?
(1) Power generation
(2) Construction of roads
(3) Food production
(4) Expansion of air ports
Solution: (3)
Food production or agriculture is a primary activity of economy making direct use of natural resources. This includes agriculture, forestry and fishing, mining, and extraction of oil and gas. This is contrasted with the secondary sector, producing manufactured and other processed goods, and the tertiary sector, producing services. Infrastructure is basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function. The term typically refers to the technical structures that support a society, such as roads, bridges, water supply, sewers, electrical grids, telecommunications, and so forth.
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