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Lesson 1 : Indian Economy
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MCQs on Indian Economy

Rangu Satish
Verified Educator@#Unacademy, GS Faculty for #UPSC

  1. India's growth's story from the eve of Independence to the liberalization phase is largely termed as 'Hindu rate of growth'. What it refers to? (a) Non inclusive growth story of India before 1990's liberalization (b) Religious belief of the successive government right from the independence. (c) Trrational developmental agenda driven by majoritarian society. (d) The phenomenon of sluggishness in growth rate of Indian economy before 1990's

  2. Solution: D 'Hindu' rate of growth was coined to refer to the phenomenon of sluggishness in growth rate of Indian economy (3.5 per cent observed persistently during 1950s through 1980s) The term, which owes to Professor Raj Krishna, Member, Planning Commission, captured popular imagination and was used synonymously to describe inadequacy of India's growth performance.

  3. With refer statements: 1. GDP growth rate of India at constant prices is steadily increasing from last decade. 2. Present base year for GDP calculation is 2011-2012. Which of the statements given above is/are correct? (a) 1 onlyy (b) 2 onlyy (c) Both 1 and 2 (d) Neither 1 nor 2 ence to Indian economy, consider the following

  4. Solution: B GDP growth rate of India at constant prices is not steadily increasing from last decade. The GDP growth rate declined to 6.72% in 2008-09 largely due to global financial meltdown following the collapse of Lehman brother:s (investment bank) of US in September, 2008 GDP growth rate improved to 8.59% in 2009-10 and 8.91% in 2010-11 due to high capital inflows attributed to the massive Quantitative Easing (QE) undertaken by the US to combat economic slowdown of global level. The GDP growth rate slumped to 6.69% in 2011-12, 4.47% in 2012-13 and 4.74% in 2013-14 (P) This was due largely to domestic policy logjam, tax disputes and shaken investor confidence in Indian economy with attendant lower Gross Domestic Savings Rate (GDSR) and Gross Fixed Capital Formation (GFCF) Present base year for calculation of GDP is 2011-2012.

  5. Which of the following measures is/are examples of expansionary fiscal policy? 1. Decrease in tax rate 2. Increase in pensions 3. Increase in unemployment compensation 4. Increase in tax rate. Select the correct answer using the codes given below. (a) 2 and 3 only (b) 2, 3 and 4 only (c) 1, 2 and 3 onl;y (d) 1, 2, 3 and 4

  6. Solution: C An EXPANSIONARY is a macroeconomic POLICY that seeks to encourage economic growth or combat inflationary price increases by expanding the money supply, lowering interest rates, increasing government spending or cutting taxes. Increasing the tax rate is not an example of expansionary fiscal policy.

  7. Which of the following industry/industries requires an Industrial license to start business in India? 1. Tobacco and Cigar products 2. Electronic Aerospace and Defence equipment 3. Hazardous chemicals 4. Alcoholic drinks Select the correct answer using the code given below (a) 3 onlyy (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1, 2, 3 and 4

  8. Solution: D The major impact of liberalisation and globalisation of economy, which started in India in July, 1991, was to do away with the Compulsory Licensing. As of now on FOUR industries are reserved for the Public Sector and only SIX industries fall under the compulsory licensing, as detailed below: LIST OF INDUSTRIES RESERVED FOR THE PUBLIC SECTOR 1. Arms and ammunition and allied items of defence equipment, Defence aircraft and warships. 2. Atomic energy. 3. The substances specified in the scheduled to the notification of the Government of India in the Department of Atomic Energy number S.0.212(E), dated the 15th March, 1995. 4. Railway transport.

  9. LIST OF INDUSTRIES FOR WHICH INDUSTRIAL LICENSING IS COMPULSORY 1. Distillation and brewing of alcoholic drinks. 2. Cigars and Cigarettes of tobacco and manufactured tobacco subsitutes. 3. Electronic Aerospace and Defence equipment: all types. 4. Industrial explosives including detonating fuses, safely fuses, gun powder, nitrocellulose and matches. 5. Hazardous chemicals. 6. Drugs and Pharmaceuticals (according to modified Drug Policy issued in September, 1994) In case of the small units which employ less than 50 workers with power or less than 100 workers without power are not required to obtain any license under Compulsory Licensing Provisions.