Indian Economic Policies and Concepts

<p>Repo Rate. (B)</p> Signup and view all the answers

<p>M3 is the most commonly used measure of money supply. (A), M1 includes currency notes in circulation. (B)</p> Signup and view all the answers

<p>Inflation and Unemployment both are high. (C)</p> Signup and view all the answers

<p>It includes total value of final goods and services produced by residents and non-residents. (A), It excludes taxes and depreciation. (C)</p> Signup and view all the answers

<p>Basic caloric needs. (D)</p> Signup and view all the answers

<p>Jayprakash Narayan (C)</p> Signup and view all the answers

<p>MPC represents a proportion of income spent on consumption. (C)</p> Signup and view all the answers

<p>Quinary sector (C)</p> Signup and view all the answers

<p>Rise in interest rates in India (C)</p> Signup and view all the answers

<p>Establishment of new public sector enterprises (B)</p> Signup and view all the answers

<p>1999 (B)</p> Signup and view all the answers

<p>When demand in the economy is low (D)</p> Signup and view all the answers

<p>Current account transactions (C)</p> Signup and view all the answers

<p>It consists of six members. (D)</p> Signup and view all the answers

<p>Sales of assets (C)</p> Signup and view all the answers

The Securities and Exchange Board of India (SEBI) was established in 1992, not on the recommendation of the Narasimham Committee. It is headquartered in Mumbai, not New Delhi.

The Cash Reserve Ratio (CRR) is the percentage of a bank's deposits that it is required to hold with the Reserve Bank of India (RBI). Banks cannot lend this money, and while they do not earn interest on it, they are not required to pay interest on it either. The CRR is a tool for regulating the money supply in the economy.

Import licensing, testing, labeling, certification, and anti-dumping measures are all considered trade barriers in India. These barriers are used to protect domestic industries from foreign competition.

Fiscal policy focuses on government spending and taxation, aiming to influence the economy's overall spending and growth. Repo rate is a tool of monetary policy, not fiscal policy.

M4 is the broadest measure of money supply, and is therefore the least liquid. M3 is the most commonly used measure of money supply. Interbank deposits are part of the money supply.

Stagflation is characterized by high inflation and high unemployment, often accompanied by slow economic growth.

National Income in India includes the total value of final goods and services produced by both residents and non-residents of the country during an accounting year. It's calculated as Net National Product at Factor Cost (NNP at FC), which excludes taxes, depreciation, and non-factor inputs (raw materials).

The Sarvodaya Plan was an economic plan drafted by Jayprakash Narayan in 1950. It primarily focused on promoting agriculture and cottage industries to drive economic growth and development, particularly in rural areas.

Marginal Propensity to Consume (MPC) refers to the proportion of an increase in income that is spent on consumption. It essentially shows how much of an extra dollar earned is spent, rather than saved.

The MPC is not always constant; it can vary depending on the level of income. Individuals with lower incomes tend to have a higher MPC, meaning they spend a larger proportion of any income increase on consumption. Conversely, those with higher incomes tend to have a lower MPC, as they may save more or allocate more to spending on non-essential goods and services.

The Quaternary sector of the economy refers to knowledge-based activities like research, education, and information technology. It involves high-level decision-making and policy formulation, contributing to overall economic development and innovation.

The Quinary sector encompasses the most advanced forms of services that are specialized and driven by expertise and knowledge. They often involve industries like healthcare, finance, and education, requiring highly skilled professionals.

A rise in interest rates in India can lead to appreciation of the Indian rupee. Higher interest rates attract foreign investors seeking higher returns on their investments, increasing demand for rupees. Similarly, more Indians traveling abroad might require more foreign currency, decreasing the supply of rupees.

The New Industrial Policy of 1991 marked a significant shift in India's economic landscape, moving away from strict regulations toward a more market-oriented approach. It introduced a series of reforms to promote industrial growth and attract foreign investment.

The New Industrial Policy introduced several key reforms, including the reduction or complete removal of industrial licensing requirements, deregulation of the industrial sector to allow for greater flexibility, reforms to improve the efficiency and competitiveness of public sector enterprises, the abolition of the Monopoly and Restrictive Trade Practices (MRTP) Act to encourage competition, and the creation of more attractive policies for foreign investment and technology transfer.

The Reserve Bank of India (RBI) uses expansionary monetary policy when the economy experiences low demand. This involves lowering interest rates to encourage borrowing and spending, thereby stimulating economic activity and increasing overall demand.

The Balance of Payments (BoP) is a record of all economic transactions between a country and the rest of the world. It comprises two main accounts: the current account, which tracks transactions related to goods, services, and transfers, and the capital account, which captures transactions related to financial assets and liabilities.