Mixed Economic Systems

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Questions and Answers

What is a defining characteristic of a mixed economic system?

It combines elements of both capitalism and communism. (correct)

It eliminates private property entirely.

It favors government ownership of all resources.

It prohibits any form of government interference.

Which of the following is NOT considered a factor of production?

Wages (correct)

Labor

Entrepreneurs

Land

In a mixed economic system, how does the government typically engage with the economy?

By abolishing private businesses.

By allowing total economic freedom with no regulations.

By intervening to pursue social aims. (correct)

By completely controlling all production.

Which of the following is considered a payment associated with the factor of production 'Capital'?

Interest Signup and view all the answers

What is the role of entrepreneurs in the context of production factors?

To take on risks and earn profits. Signup and view all the answers

What does the circular flow model primarily illustrate?

The interdependence between households and businesses. Signup and view all the answers

Which payment corresponds to labor in the factors of production?

Wages Signup and view all the answers

What typically distinguishes capitalism from communism?

The allowance of private property. Signup and view all the answers

What is the primary function of the National Housing Bank (NHB)?

To serve as the apex institution in housing finance Signup and view all the answers

When was the National Bank for Agriculture and Rural Development established?

July 1982 Signup and view all the answers

Which committee's recommendation led to the establishment of the National Bank for Agriculture and Rural Development?

The Shivraman Committee Signup and view all the answers

What does the Balance of Payment consist of?

Current and capital account payments Signup and view all the answers

What is another name for the Balance of Trade?

Balance on merchandising goods Signup and view all the answers

What is the primary characteristic of runaway or hyperinflation?

Inflation rate is extreme and uncontrollable Signup and view all the answers

Which term describes a situation where aggregate demand exceeds aggregate supply?

Inflationary gap Signup and view all the answers

Who was the first Indian Governor of the Reserve Bank of India?

C.D. Deshmukh Signup and view all the answers

What is one of the functions of the Reserve Bank of India?

Serving as a custodian of commercial bank reserves Signup and view all the answers

What type of inflation is characterized by having high unemployment along with rising prices?

Stagflation Signup and view all the answers

Which city was the original head office of the Reserve Bank of India before it was moved to Mumbai?

Kolkata Signup and view all the answers

What commission recommended the formation of the Reserve Bank of India?

Hilton Young Commission Signup and view all the answers

What describes creeping inflation in terms of its rate?

Between 1% and 3% Signup and view all the answers

What does the Consumer Price Index (CPI) measure?

Price changes from the perspective of a retail buyer Signup and view all the answers

Which organization is responsible for compiling CPI for Industrial Workers?

Labour Bureau Signup and view all the answers

What is the base year for the Consumer Price Index as mentioned?

2012 Signup and view all the answers

Which of the following is true regarding the types of CPI?

There are four types of CPI including one that is combined Signup and view all the answers

What does the statutory liquidity ratio (SLR) represent?

Amount of money that banks must invest in specified securities Signup and view all the answers

What is the function of the Cash Reserve Ratio (CRR)?

To require banks to hold a percentage of deposits in their reserve accounts Signup and view all the answers

Which ministry released the CPI for Industrial Workers with base year 2016?

Ministry of Labour and Employment Signup and view all the answers

Which of these is a method used for gathering economic data?

Qualitative methods Signup and view all the answers

What is the main purpose of DFIs?

To finance different sectors through borrowing and selling bonds Signup and view all the answers

Which organization is recognized as India's first Development Financial Institution?

IFCI Signup and view all the answers

In which year was ICICI Bank Limited established as a subsidiary of ICICI?

1994 Signup and view all the answers

What significant change occurred to IDBI in 2003?

It became a Universal Bank Signup and view all the answers

Which institution is known as the apex organization for foreign trade investment in India?

EXIM Bank Signup and view all the answers

When was the Industrial Development Bank of India established?

1964 Signup and view all the answers

What was the primary role of the Industrial Reconstruction Corporation of India?

To revive weak industrial units Signup and view all the answers

When was the Small Industries Development Bank of India granted autonomy?

1998 Signup and view all the answers

Study Notes

Economic Systems

Mixed economy combines elements of capitalism and communism, allowing private property alongside government intervention for social goals.
Economic freedom is permitted for the use of capital within a mixed system.

Factors of Production

Key factors include:
- Land: compensated through rent
- Labor: compensated through wages
- Capital: compensated through interest
- Entrepreneurs: compensated through profit

Circular Flow of Income

Represents the flow of resources and payments between different sectors of the economy.

Inflation Types

Creeping inflation: Low inflation rate (up to 3%).
Walking/Trotting inflation: Moderate inflation rate (3-7%).
Running/Galloping inflation: High inflation rate (over 10%).
Runaway/Hyperinflation: Extreme inflation scenario.

Economic Gaps

Inflationary gap: Occurs when aggregate demand exceeds aggregate supply.
Deflationary gap: Occurs when aggregate supply exceeds aggregate demand.

Reserve Bank of India (RBI)

Established in 1935 under the RBI Act, 1934, originally headquartered in Kolkata, now in Mumbai.
First Governor: Sir Osborne Smith; first Indian Governor: C.D. Deshmukh; current Governor: Shaktikanta Das.
Key functions include issuing bank notes, serving as banker to the government, managing cash reserves, and controlling credit.

Consumer Price Index (CPI)

Measures price changes from a retail buyer's perspective, released by the National Statistical Office (NSO).
Four types of CPI include CPI for Industrial Workers, Agricultural Laborers, Rural Laborers, and a combined measure.
Base year for CPI is 2012, with recent updates using a base year of 2016.

Financial Ratios

Statutory Liquidity Ratio (SLR): Required to invest a certain percentage in specified securities.
Cash Reserve Ratio (CRR): Portion of deposits to be held in a current account.

Development Financial Institutions (DFIs)

IFCI: First DFI established in 1948, focused on industrial development.
ICICI: Founded in 1955, established ICICI Bank in 1994; became the first universal bank in 2002.
IDBI: Created in 1964, transitioned to a universal bank in 2003.
IRCI: Founded in 1971 for reviving weak industrial units.
SIDBI: Established in 1989 for small industry development.

Foreign Trade and Agriculture

EXIM Bank: Established in January 1982; apex institution for foreign trade.
NABARD: Founded in July 1982 for agriculture and rural development; recommended by the Shivraman Committee.

Housing Finance

National Housing Bank (NHB): Established in 1988 as the apex housing finance institution.

Balance of Payments

A systematic record of economic transactions over a specified period, including current and capital account payments.

Current Account

Balance of Trade/Visible: Refers specifically to the balance of merchandise goods in international trade.

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Description

Explore the characteristics and features of mixed economic systems that blend capitalism and communism. This quiz will help you understand the balance between state control and private ownership in economic frameworks. Test your knowledge on the advantages and disadvantages of these systems.