Liberalisation

Liberalisation (British English) is indeed a general phrase used to refer to the activity of creating rules, organisations, or views less stringent, typically by abolishing some government controls or prohibitions. The phrase is most commonly used in the context of business, in which it relates to the elimination or decrease of constraints put on (a certain field of) economic growth.

Nevertheless, when addressing drug liberalisation, liberalisation may also be used as a synonym for decriminalisation or legalisation (the process of making anything lawful after it was previously prohibited).

India’s liberalisation relates to the liberalisation of a state’s financial policies only to create the industry more competitive and service-oriented, as well as to increase the role of the private sector and international investment. Within the late twentieth century, India’s economic liberalisation was part of the worldwide trend of economic liberalisation. Although there were modest attempts at liberalisation between 1966 as well as 1980, a much more comprehensive liberalisation began in 1991. The change was motivated by a stability problem that triggered a massive recession, as well as structural reform plans for Imf and The World bank loans.

Multiple-Choice Questions

1. The process of removing government-imposed limits or impediments is known as:
   1.  Trade liberalisation
   2.  Affluent commerce
   3.  Financial investment
   4. Liberalisation 

(D) is the correct answer.

2. The goal of liberalisation is to
   1.  Societal structure based on socialism
   2. Economic Planning 
   3.  Economic Reforms 
   4.  Land Reforms 

C is the correct answer.

3. Price rigidity is a feature of the market.
   1. Monopoly 
   2.  An oligopoly is a situation in which there are only a few
   3. Monopolies and Monopolistic Competition
   4.  Unparalleled competitiveness

C is the correct answer.

4. What is the term for removing government-imposed limits or barriers?
   1.  Trade liberalisation
   2. Affluent commerce
   3. Financial investment
   4. Liberalisation

Answer: D

5. What is the goal of liberalisation?
   1. Societal structure based on socialism
   2. Financial planning
   3. Reforms in the economy
   4. Land reforms

Answer: C

6. Which of the following is characterised by price rigidity?
   1. Monopoly
   2. An oligopoly is a situation in which there are only a few
   3. Monopolies and Monopolistic Competition
   4. Unparalleled competitiveness

B is the answer

7. Which of the following was the primary motivation for the country’s economic reforms?
   1.  India was dealing with a massive budget imbalance.
   2.  India’s balance of payments was in the red.
   3. The price of some key items has risen.
   4.  All of the preceding

D is the answer.

8. One of the most important initiatives implemented in the international trade policy since 1991 was one of the following?
   1.  Import restrictions from other nations are being eased.
   2. Export restrictions to foreign nations are being eased.
   3. A and B are both wrong.
   4. A and B are both accurate.

D is the answer.

9. Which of the following is the primary benefit of inbound foreign direct investment into India?
   1. Inward foreign direct investment aids in the inflow of foreign currency into the country.
   2. Incoming foreign direct investment aids in the introduction of contemporary technologies into the country.
   3. Incoming foreign direct investment contributes to the country’s managerial capabilities.
   4. All of the preceding

D is the answer.

10. Which of the following claims concerning the federal budget deficit is true?
    1.  It is a portion of total government spending that is funded through raising taxes.
    2.  It is a portion of total government spending that is funded through borrowing.
    3.  It is a portion of the overall government spending that is covered by selling the shares in public enterprises that they own.
    4. It is a portion of overall government spending that is funded by the imposition of public assets.

B is the answer

11. Which of the following assertions regarding the new fiscal policy is false?

1. 1. The country’s privatisation was aided by the new economic policies.
   2. The country’s liberalisation was aided by the new economic policies.
   3. The country’s urbanisation was aided by the new economic policies.
   4. The country’s new economic policies aided in the start of globalisation.

C is the answer

12. Which of the following assertions about the process of beginning foreign exchange changes is correct?
    1. The rupee has lost value versus other currencies.
    2.  The government decided to implement a fixed exchange rate system.
    3.  The market forces decide the exchange rate.
    4.  A and care are both accurate.

A is the answer

13. Which one of the following comments accurately defines the privatisation process?
    1.  A firm gets privatised when it is transferred to a non-profit entity.
    2. Exporting operations to other corporations is a part of the privatisation process.
    3. A few public service units are sold to the private sector as part of the privatisation process.
    4.  None of the above

 answer: C

14. Which of the following claims concerning the 1991 new economic policy’s import licensing regulations is correct?
    1.  Except for dangerous commodities, import licensing has been removed.
    2. Except for ecologically sensitive businesses, import licensing was removed.
    3.  A and B are both wrong.
    4.  A and B are both wrong.

D is the answer.

15. Which one of the following claims concerning liberalisation is correct?
    1. It entails fewer government regulations and deregulation, as well as more autonomy for private ventures.
    2. It involves contracting out portions of the organisation’s activities to other parties.
    3.  A and B are both accurate.
    4.  A and B are both wrong.

Answer: C

16. Under the government’s liberalisation program, which one of these economic changes was launched by the government?
    1.  Reforms in the industrial and financial sectors
    2.  Reforms in the industrial, agricultural, and financial sectors
    3. Reforms in the agricultural and financial sectors
    4. Reforms in the industrial and agriculture sectors

A is the answer

17. Which of the following characteristics of privatisation is not present?
    1. Implementing the policy of public-sector disinvestment
    2. The public sector is being privatised.
    3. Rates of taxation are being reduced.
    4.  A and B are both accurate.

C is the answer

18. Which one of the following assertions concerning financial changes is accurate?
    1.  The banking sector is the focus of financial sector reforms.
    2.  The majority of financial sector changes are focused on foreign currency markets.
    3. A and B are both accurate.
    4. A and B are both wrong.

C is the answer

19. The most pressing issue that caused the 1991 implementation of the New Economic Policy was:
    1. Poor public sector performance
    2.  Foreign exchange crisis
    3.  High tax rates
    4.  All of the above

Ans – B

20. The most important change in Foreign Trade Policy from 1991 onwards was:
    1.  Import limitations are being relaxed;
    2. Export restrictions are being relaxed;
    3. Both a) and b) are being relaxed;
    4. Import limits are being relaxed specifically on specified commodities

Ans – C

21. For the following reasons, inward foreign direct investment is beneficial:
    1. Provides foreign exchange;
    2. Provides current technology;
    3. Provides managerial knowledge;
    4. Provides all of the above

Ans – D)

22. The fiscal deficit is the portion of total government spending that is covered by:
    1.  Increasing taxes
    2.  Selling government-owned stock
    3.  Borrowings
    4. All of the above

Ans – C)

23. The government’s fiscal policy includes:
    1. Government tax policy
    2.  Government spending policy
    3.  Both a) and b)
    4.  Neither a) nor b)

Ans – C)

24. Reforms in the financial industry are carried out by:
    1. Reserve Bank of India
    2.  Government of India
    3.  Neither a) nor b)
    4.  Both a) and b)

Ans – B)

25. India’s biggest source of foreign money is:
    1.  International loans
    2.  Foreign direct investment
    3.  Neither a) nor b)
    4.  Both a) and b)

Ans – B)

26. Which of the following is a reference to the government’s earlier limitations being eased?
    1. Privatisation;
    2.  Globalisation;
    3.  Disinvestment, and
    4.  Liberalisation

Ans – D)

27. When was the WTO established?
    1. The year 1995;
    2.  The year 1948
    3.  1996;
    4. 1994;
    5. 1993; 

Ans – A)

28. _______________means tying the domestic and global economies together.
    1. Globalisation
    2.  Privatisation
    3. Liberalisation
    4. Disinvestment

Ans – A)

29. Two-country trade is referred to as:
    1. Bilateral trade
    2.  Bilateral trade
    3. Multilateral trade
    4.  Both a) and b) are true.

Ans – A)

30. Which of the following policies was implemented as part of the New Economic Policy?
    1.  Liberalisation,
    2. Privatisation,
    3. Globalisation, and
    4.  Licensing

a), b), c) are the answers.

31. When did the New Economic Policy become official?
    1. June 1991;
    2. May 1991;
    3. July 1991;
    4.  January 1991

Ans – C)

32. The sale of public sector shares on the market is referred to as.
    1.  Globalisation,
    2. Privatisation,
    3. Disinvestment and
    4. Liberalisation

Ans – C)

33. One of the reasons for this was the lower cost of imported goods:
34. 1.  Unemployment is rising
    2.  imbalanced development
    3.  Low rate of industrial expansion
    4. Consumerist Spread

Ans – C)