Indian Economy- Part 1

Indian Economy

1. What is the primary goal of India's Monetary Policy as implemented by the Reserve Bank of India (RBI)?

a) Reducing fiscal deficit b) Controlling inflation c) Increasing foreign direct investment (FDI) d) Boosting exports

b) The primary goal of the Reserve Bank of India's monetary policy is to maintain price stability while keeping in mind the objective of growth. This mainly involves controlling inflation within a target range.

2. Which of the following statements best describes 'Fiscal Deficit'?

a) The difference between total revenue and total expenditure of the government, including borrowings b) The difference between the government's revenue receipts and expenditure c) The excess of government expenditure over revenue d) The total loans and borrowings made by the government

c) Fiscal deficit is the difference between the government's total expenditure and its total revenue (excluding borrowings). It indicates the total borrowing requirements of the government from all sources.

3. The Goods and Services Tax (GST) in India is an example of which type of tax system?

a) Direct tax b) Regressive tax c) Indirect tax d) Proportional tax

c) GST is an indirect tax levied on the supply of goods and services. It is collected by businesses on behalf of the government and passed on to the final consumer, who bears the tax.

4. What does the 'Lorenz Curve' represent in economics?

a) The relationship between inflation and unemployment b) The distribution of income or wealth among the population c) The rate of economic growth over time d) The trade-off between consumption and savings

b) The Lorenz Curve is a graphical representation of the distribution of income or wealth within an economy, showing the proportion of total income earned by various segments of the population.

5. Which sector has the largest contribution to India’s Gross Domestic Product (GDP) in recent years?

a) Agriculture b) Industry c) Services d) Mining

c) The services sector has been the largest contributor to India's GDP, encompassing a wide range of activities such as information technology, telecommunications, finance, insurance, and real estate, which have been growing rapidly.

6. What is 'Stagflation'?

a) A period of high inflation and high unemployment b) A period of high inflation and high growth c) A period of low inflation and high unemployment d) A period of deflation and high unemployment

a) Stagflation is an economic condition characterized by stagnant economic growth, high unemployment, and high inflation. It presents a dilemma for policymakers because measures to reduce inflation may exacerbate unemployment.

7. The term 'Twin Deficit' in economics refers to which two deficits?

a) Current Account Deficit and Fiscal Deficit b) Budget Deficit and Trade Deficit c) Revenue Deficit and Capital Deficit d) Fiscal Deficit and Revenue Deficit

a) The 'Twin Deficit' refers to a situation where a country has both a current account deficit (excess of imports over exports) and a fiscal deficit (excess of government spending over revenue).

8. Which concept is used to measure the inequality in the distribution of income in an economy?

a) Gini Coefficient b) Phillips Curve c) Laffer Curve d) Keynesian Multiplier

a) Gini Coefficient Explanation: The Gini Coefficient is a measure of inequality in the distribution of income or wealth within a nation. A Gini Coefficient of 0 represents perfect equality, while 1 indicates perfect inequality.

9. What is the 'Inflation Targeting' approach in monetary policy?

a) Setting a fixed rate of inflation to be achieved b) Allowing inflation to fluctuate freely without any targets c) Using interest rates to control inflation within a certain target range d) Reducing inflation to zero at all costs

c) Inflation targeting is a monetary policy strategy used by central banks to keep inflation within a specified range, primarily through adjusting interest rates and other monetary tools.

10. The concept of 'Green GDP' accounts for which of the following?

a) Only the growth in agricultural output b) Economic growth minus environmental degradation and resource depletion c) GDP adjusted for inflation d) The value of goods and services in the green energy sector

b) Green GDP is an index of economic growth with the environmental consequences of that growth factored into a country's conventional GDP. It subtracts the cost of environmental degradation from the GDP.

If any answer found wrong, Please comment.

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