Tag: economic mechanism

Questions Related to economic mechanism

In the pre-reforms period (i.e. before 1991), banking scene was dominated by the __________ sector.

organisation of commerce and management economics of development and planning fundamental of economic development economics of development economic mechanism

  1. private

  2. public

  3. both (a) and (b)

  4. neither (a) nor (b)

Show answer
Correct Option: B
Explanation:

India adopted the socialist form of economy prior to 1991 which involved a lot of government intervention in all the sectors including banking sector which made Indian economy a little conservative compared to other economic structures prevalent then. But after 1991, the government disinvested all its share from most of the sectors including banking sector which brought privatization in banking sector where public sector used to dominate prior to 1991.

Which one of the following taxes belong exclusively to the State Governments?

organisation of commerce and management economics of development and planning fundamental of economic development economics of development economic mechanism

  1. Income Tax

  2. Agricultural Tax

  3. Excise Tax

  4. Wealth Tax

Show answer
Correct Option: B
Explanation:

Agricultural tax belong exclusively to the State Governments. This means that tax from agricultural sector or primary sector of the economy is collected only by the state government. Central government has no authority of collecting agricultural tax.

Which of the following is an objective of VAT?

organisation of commerce and management economics of development and planning fundamental of economic development economics of development economic mechanism

  1. To avoid double taxation effect or cascading effect

  2. To promote cost-efficiency, by permitting credit on inputs

  3. To ensure equitable distribution of tax impact amongst Dealers

  4. All of the above

Show answer
Correct Option: D
Explanation:
VAT stands for Value Added Tax. Enactment of VAT on goods has certain objectives:
a) To avoid double taxation effect or cascading effect
b) To promote cost-efficiency, by permitting credit on inputs
c) To ensure equitable distribution of tax impact amongst Dealers

Which of the following is not true about the pre-reforms period (i.e. before 1991)?

organisation of commerce and management economics of development and planning fundamental of economic development economics of development economic mechanism

  1. Shortage of Foreign Exchange

  2. Heavy Government Borrowings

  3. Huge Losses of Public Sector Enterprises

  4. Surplus Budget in each financial year

Show answer
Correct Option: D
Explanation:

In pre-reform period, that is, before the year of 1991, Surplus Budget in each financial year. Surplus Budget in each financial year introduced after the year of 1991. Budget can be defined as a statement of receipts and expenditure of an economy.

Which of the following does not relate to the Banking Sector Reforms in 1991?

organisation of commerce and management economics of development and planning fundamental of economic development economics of development economic mechanism

  1. Introduction of Derivative Products

  2. Restriction of credit for purchase of consumer durables

  3. Liberalisation of principles governing Dividend Payments

  4. Emphasis on transparency

Show answer
Correct Option: B
Explanation:

Prior to 1991, credit purchases was not allowed in the consumer market but after the coming of new economic policies credit purchase on consumer durables were allowed as there was high competition in the market after the coming of foreign merchandise.  

As part of Economic Reforms in 1991, Financial Sector Reforms relates to :

organisation of commerce and management economics of development and planning fundamental of economic development economics of development economic mechanism

  1. Banking Sector

  2. Capital Market Sector

  3. Insurance Sector

  4. All of the above

Show answer
Correct Option: D
Explanation:

Financial sector reforms relates to reforms in all such sectors where finance was a major and prominent factor which included all the three sector i.e. banking, capital market, and insurance. 

In which of the following situations, the Law of Variable Proportions will not apply?

organisation of commerce and management economics of development and planning fundamental of economic development economics of development economic mechanism

  1. Improvement in technology

  2. When all factors are proportionately varied

  3. Where the factors must be used in fixed proportions to yield the product

  4. All of the above

Show answer
Correct Option: D
Explanation:
In the following situations, the Law of Variable Proportions will not apply:
a) Improvement in technology
b) When all factors are proportionately varied c) Where the factors must be used in fixed proportions to yield the product
Law of variable proportions is also known as the law of law of diminishing returns. This law shows the production function with one input factor variable while keeping the other input factors constant.

Which of the following involve a trade-off?

organisation of commerce and management economics of development and planning fundamental of economic development economics of development economic mechanism

  1. Taking a nap.

  2. All of these answers involve trade-offs.

  3. Watching a football game on Saturday afternoon.

  4. Going to university.

Show answer
Correct Option: B
Explanation:
Following situations involve a trade-off :a) Taking a nap
b) Watching a football game on Saturday afternoon
c) Going to university
Trade off refers to any sacrifice to get a certain product or experience. As per the economics term, trade off is referred as opportunity cost, that is, next best alternative use.

All of the following developments were noticed during 1991 (when economic reforms were enforced) except one. Identify it.

organisation of commerce and management economics of development and planning fundamental of economic development economics of development economic mechanism

  1. National Debt was nearly 60% of the GNP of India

  2. Inflation crossed double digits

  3. Foreign Reserves were maintained at a very high level

  4. None of the above

Show answer
Correct Option: C
Explanation:

All  the following developments ( such as National Debt was nearly 60% of the GNP of India, Inflation crossed double digits) were noticed during 1991, when economic reforms were enforced, except  "Foreign Reserves were maintained at a very high level. During 1991, Indian Government adopted New Economic Policy which emphasized liberalization, privatization and globalization.

New Economic Reforms in India were introduced in ___________.

organisation of commerce and management economics of development and planning fundamental of economic development economics of development economic mechanism

  1. 1999

  2. 1991

  3. 2001

  4. 2003

Show answer
Correct Option: B
Explanation:

During 1991, some new economic reforms where introduced in India which were also known as LPG ( Liberalization, Privatization, and Globalization). These reforms where taken to make the economy stable and take it out from the national crisis which it was facing.