Tag: economic mechanism

Questions Related to economic mechanism

Cross holding method of Disinvestment refers to ____________________.

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

  1. Government selling part of its Shares in one PSU to other PSUs

  2. Government selling Shares of PSUs to Public Sector Financial Institutions & Banks

  3. Government's own Financial Institutions buying Government's stake in select PSU's and holding them until any third buyer emerges

  4. None of the above

Show answer
Correct Option: A
Explanation:

Cross holding method of Disinvestment refers to Government selling part of its Shares in one PSU to other PSUs.The term disinvestment is more popularly used where central/ state government sells its holdings of public sector companies.Disinvestment means selling of Public investment to a Private entrepreneur.Disinvestment of the public sector can be defined as a process of transferring the ownership of any enterprise from public to private sector.

Which of the following is a function of an entrepreneur?

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

  1. Initiating a business enterprise

  2. Risk bearing

  3. Innovating

  4. All of the above

Show answer
Correct Option: D
Explanation:

An entrepreneur has to initiate a business enterprise, bear the risk and innovate new products.

The term disinvestment is more popularly used ____________________________.

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

  1. Where a holding company sells shares of a Subsidiaray company

  2. Where an investment company off loads its holding

  3. Where central / State government sells its holdings of public sector companies

  4. None of the above

Show answer
Correct Option: C
Explanation:

The term disinvestment is more popularly used where central/ state government sells its holdings of public sector companies.Disinvestment means selling of Public investment to a Private entrepreneur.Disinvestment of the public sector can be defined as a process of transferring the ownership of any enterprise from public to private sector.

Comforts lies between the.

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

  1. Inferior goods and necessaries

  2. Luxuries and inferior goods

  3. Necessaries and luxuries

  4. None of the above

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Correct Option: C
Explanation:

Comforts lies between necessaries and luxuries because comforts refer to those goods which are not required for a happy living.

Which of the following goods is likely to have perfectly inelastic demand?

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

  1. Car

  2. Salt

  3. Cabbage

  4. Sugar

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Correct Option: B
Explanation:

'Salt' have perfectly inelastic demand.

In a very short period the supply.

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

  1. Can be changed

  2. Cannot be changed

  3. Can be increased

  4. None of the above

Show answer
Correct Option: B
Explanation:

In very short period (market period) supply cannot be changed.

Privatisation refers to __________________.

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

  1. The transfer of assets or service functions from public to private ownership or control

  2. The opening of hitherto closed areas to Private Sector entry

  3. Both (a) and (b)

  4. Neither (a) nor (b)

Show answer
Correct Option: C
Explanation:

Privatization refers to -a) The transfer of assets or service functions from the public to private ownership or control

b) The opening of hitherto closed areas to Private Sector entry
In simple words, Privatization can be defined as a process of transferring ownership of an enterprise or industry from the public to the private sector.

Equity Offer through 'Differential Pricing Method' primarily refers to ________________________.

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

  1. Government selling part of its Shares in one PSU to other PSUs

  2. Government selling Shares of PSUs to Public Sector Financial Institutions and Banks

  3. Government's own Financial Institutions buying Government's stake in select PSU's and holding them until any third buyer emerges

  4. None of the above

Show answer
Correct Option: B
Explanation:

Differential pricing refers to different prices functional in the market based on various factors such as geography, external environment or various reasons. This implies that there is one product in the market, but, different people need to pay different prices for it. 

Cross holding method of Disinvestment refers to Government selling part of its Shares in one PSU to other PSUs. The term disinvestment is more popularly used where central/ state government sells its holdings of public sector companies. Disinvestment means selling of Public investment to a Private entrepreneur.

The correct option is B.

Sale of a major portion of Government stake to a Strategic Buyer and also giving over the management control is called as ____________.

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

  1. Strategic Sale

  2. Cross Holding

  3. Warehousing

  4. Retaining Golden Share

Show answer
Correct Option: A
Explanation:

When the government decides to transfer the ownership and control of a public sector entity to some other entity, either private or public, the process is called strategic disinvestment. 

The Department of Investment and Public Asset Management  which comes under the Finance Ministry defines Strategic disinvestment as follows: “Strategic disinvestment would imply the sale of a substantial portion of the Government shareholding of central public sector enterprises of up to 50%, or such higher percentage as the competent authority may determine, along with transfer of management control.”

The correct option is A.

Qualitative measures to control credit are also called _______________.

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

  1. General Measures

  2. Selective Methods

  3. Both (a) and (b)

  4. Neither (a) nor (b)

Show answer
Correct Option: B
Explanation:

Qualitative measures to control credit are also called selective methods.Qualitative methods of credit control affects specific sectors of the economy. Qualitative instruments of credit control are those instruments which focus on select sectors of the economy. This policy of credit control is also known as policy of selective control.