MCQ
Q :- ‘Economic Reforms’ measures in India were formally introduced in
(A) July, 1991
(B) August, 1947
(C) January, 1980
(D) March, 1990
Answer: Option A (Solution Below)
Solution:-
The correct answer is July 1991.
- Prime Minister P.V. Narsimha Rao and Finance Minister Manmohan Singh began the economic reform process in July 1991.
- It was termed as ‘liberalization’ by the media.
- The goal of the reforms was to make the economy more market and service-oriented and expand the role of private and foreign investment.
- There was significant opposition to the reforms, but both Rao and Singh continued the reforms.
A. Poor performance of public sector
B. High tax rate leading to tax evasion
C. Foreign exchange crisis
D. All of these
Q :- When did the Indian Government introduced a policy of liberalisation known as ‘New Economic Policy’?
(a) 1980
(b) 2000
(c) 1994
(d) 1991
Ans : (d) 1991
Q :- Which of the following has/have occurred in India after its liberalization of economic policies in 1991?
1. Share of agriculture in GDP increased enormously.
2. Share of India’s exports in world trade increased.
3. FDI inflows increased.
4. India’s foreign exchange reserves increased enormously.
Options:-
(A) 1 and 4 only
(B) 2, 3 and 4 only
(C) 2 and 3 only
(D) 1, 2, 3 and 4
Answer: Option :- B (Solution Below)
Solution:-
The correct answer is 2, 3 and 4 only.
Q :- Which of the following are parts of structural Adjustment Programs of New Economic Policy (NEP) in 1991.
a) Industrial reforms
b) Balance of Payment adjustment
c) Tax reforms
d) Fiscal reformsSelect the correct answer using the code given below.
Options:-
(A) a only
(B) b and d only
(C) a, b and c
(D) a, c and d
Answer :- Option – D
Q :- The NEP in 1991 was initiated by the
Solution:The NEP in 1991 was initiated by the then Union finance minister Dr. Manmohan Singh.
Q :- The measures taken under NEP are called
Solution:The measures taken under New Economic Policy (NEP) are called economic reforms as these policies sought to reform the Indian economy and remove the rigidities that had entered into the various segments of the economy.
Q :-Which act was removed under NEP
Q :- New plan of action by government to influence production and capital formation activities in the country
Solution :- NEP, also known as the New Economic Policy was the new plan of action, initiated in 1991 by the then Union Finance minister, Dr. Manmohan Singh. It consisted of wide ranging economic reforms which changed the direction of our developmental strategies.
Q :- The most urgent problem which prompted the introduction of the New Economic Policy in 1991 was
Q :- Who wrote the book “Planned Economy for India”
(A) M Visvesvaraya
(B) Sardar Patel
(C) Jawaharlal Nehru
(D) Mahatma Gandhi
Answer: Option – A (Solution Below)
Solution:-
The book “Planned Economy for India” written by M Visvesvaraya.
Q :- Demonetization had occurred in India in the year 1946 and 1978. On which date did the third demonetization occur?
(A) 8th November 2016
(B) 8th November 2015
(C) 18th November 2016
(D) 28th November 2015
Answer: Option – A (Solution Below)
Solution:-
The correct answer is 8th November 2016
- On 8 November 2016, the Government of India announced the demonetization of all ₹500 and ₹1,000 banknotes of the Mahatma Gandhi Series.
- It also announced the issuance of new ₹500 and ₹2,000 banknotes in exchange for the demonetized banknotes.
- The main objective of this demonetization is to curb black money.
- Demonetisation has been implemented twice -1946 and 1978 – in the past.
- The first currency ban: In 1946, the currency note of Rs 1,000 and Rs 10,000 were removed from circulation.
Q :- Who was the finance minister during the 1991 economic reforms?
(A) Manmohan Singh
(B) PV Narasimha Rao
(C) R. K. Shanmukham Chetty
(D) R. Venkataraman
Answer: Option – A (Solution Below)
Solution:-
The correct answer is Manmohan Singh.
- Manmohan Singh served as the finance minister during the 1991 economic reforms.
- He was the finance minister in the PV Narasimha Rao government.
- Manmohan Singh is the 13th Prime Minister of India (2004 to 2014).
- He is the first Prime Minister from the Sikh community.
- First Prime Minister from the minority community.
- Only governor of RBI who became the prime minister of India.
- He was the deputy chairman of the planning commission during the period 1985 to 1987.
- He is the first prime minister to visit the Siachin glacier.
- Notable works: Changing India, The Quest for Equity in Development
Q :- What were the main reasons behind the Liberalization of Economy or Economic reforms 1991?
1.Huge External Debt and the rise in Fiscal Deficit.
2. Rising prices of essential goods.
3. Balance of payment crisis.
4. Iraq War.
Options:-
(A) 1, 2 and 3
(B) 2, 3 and 4
(C) 1, 3 and 4
(D) All of the above
Answer: Option :- D (Solution Below)
Solution:-
The correct answer is All of the above.
- The government introduced a new set of policy measures in the form of LPG (Liberalization, Privatization, and Globalization) reforms that changed the direction of our developmental strategies.
- Reasons behind the 1991 economic reforms:
- Inefficient management of the Indian economy in the 1980s.
- The inflation rate increased to around 16.7% due to the rapid increase in the money supply.
- Rise in Fiscal Deficit due to the increase in non-development expenditure resulting in a rise of public debt and interest. Hence, Statement 1 is correct.
- Interest liability became 36.4% of total government expenditure.
- Increase in adverse Balance of Payments. Hence, Statement 3 is correct.
- Rising prices of essential goods. Hence, Statement 2 is correct.
- Iraq War in 1990-91 led to a rise in petrol prices. The flow of foreign currency from Gulf countries stopped and this further aggravated the problem. Hence, Statement 4 is correct.
- The dismal Performance of PSUs due to political interference and became a big liability for the government.
- India’s foreign exchange reserve fell to a low ebb in 1990-91 and it was insufficient to pay for an import bill for 2 weeks.
Q :- The economic crisis of 1991 was characterised by
a. Reduced foreign exchange reserves.
b. Rolling over of Indian foreign debt by international creditors.
c. Increase in the fiscal deficit.
d. Sale of gold from reserves.
Options:-
(A) a, b and c only
(B) b, c and d only
(C) c, d and a only
(D) d, a and b only
Answer: Option :- C (Solution Below)
Solution:-
The correct answer is c, d and a only.
- Increase in the Oil Prices swept the Foreign Currency Reserves of the country.
- This led to the reduction of foreign exchange reserves. Hence Statement a is correct.
- The crisis was caused by currency overvaluation, the current account deficit, and investor confidence played a significant role in the sharp exchange rate depreciation.
- It leads to an increase in the fiscal deficit. Hence statement c is correct.
- India was forced by circumstances to borrow against the security of the Gold Reserves.
- That led to the sale of gold from reserves. Hence statement d is also correct.
Q :- Industrial policy of 1991 was
Solution:The industrial policy of 1991 dereserved many of the industries which were previously reserved only for the public sector allowing the entry of the private sector. There are only 3 industries which are now reserved for the public sector.
Q :- First generation of reforms were implemented between which among the following years in India?
(A) 1990-1995
(B) 1991-1996
(C) 1991-2000
(D) 1992-1997
Answer: Option – C (Solution Below)
Solution:-
The correct answer is 1991-2000.
- It was in the year 2000-01, that the government announced the reforms of the second generation, the ones which had been initiated by the then in 1991-2000 were called as 1st generation reforms. Important steps taken during these reforms were-
- Promotions to the private sector
- To make the Public sector undertaking more profitable and efficient.
- Reforms for the banking sector, Insurance, etc.
- Tax reforms
- The second generation of reforms was launched in the year 2000-01 when the reforms launched in the 1990s were not taking place as per the desired level of improvement.
Q:- APM is the term used in the second generation reforms,
what is the meaning of APM?
(A) Administrator and Person’s Mentor
(B) Administrator and People’s Mechanism
(C) Administered Price Mechanism
(D) Administered People Mechanism
Answer :- Option – C (Solution Below)
Solution:-
The correct answer is the Administered Price Mechanism.
- Administered Price Mechanism(APM) basically defines the term for the products in an economy whose price is fixed or regulated by the government.
- During the second generation reforms, many products were dismantled from the APM because many products that were under the APM were manufactured by the private sector and they were not sold on the market principles which hindered the profit of the sellers as well as the manufacturers.
- Petroleum, Sugar, Fertilizers, Drugs, etc. were totally under the APM before the second generation reforms, now in petroleum only kerosene, LPG was under the APM, while petrol, diesel, and lubricants phased out from the APM.
- Only urea among the fertilizers under the APM, while many drugs were phased out from the mechanism.
Q :- Which of the statements is most suitable to describe direction of India’s foreign trade?
(A) Trade with OPEC regions has improved substantially
(B) Importance of OECD countries in exports of India has increased
(C) UK occupies first place in India’s exports
(D) Import from SAARC has increased
Answer :- Option – A (Solution Below)
Q :- Which committee was formulated to look into the matter of capital account convertibility in India?
(A) Narasimham committee
(B) Tarapore committee
(C) Tendon committee
(D) Chore committee
Answer: Option :- B (Solution Below)
Solution:-
Currency Convertibility:-
- Currency convertibility means the currency of a country can be freely converted into foreign exchange at a market-determined exchange rate. It is a precondition for the rapid growth of world trade and smooth capital flows.
- In an economy, the status of currency convertibility can be better understood by assessing policy framework related to the capital account convertibility and current account convertibility.
Capital Account Convertibility in India:-
- Capital account convertibility (CAC) means that capital flows – flows of portfolio capital, direct investment flows, flows of borrowed funds and dividends and interest payable on them – is freely convertible into foreign exchange and vice-versa at the market-determined exchange rate.
- In India, since the implementation of the New Economic Policy (NEP) of 1991 and the associated currency reforms currency convertibility has been allowed with respect to both the accounts.
- However, fuller convertibility has been in force since 1993-94 with respect to the current account, currency on account of the capital account is only partially allowed in the country.
- In order to study the feasibility of the CAC, the Reserve Bank of India (RBI) set up the Committee on Capital Account Convertibility with S S Tarapore as its head in 1997.
Q :- In which among the following year was ‘liberalised industrial policy’ in India was announced for the first time?
Options:-
Q :- Increase in aggregate output of goods and services are
Options:-
Solution :- Economic growth is the increase in the value of the goods and services produced by an economy over time. It is conventionally measured as the percentage rate of increase in real Gross Domestic Product, or real GDP (GDP adjusted for inflation).
Q :- The economic reforms were intended to take the Indian economy into three specific directions which are
Option:-
Q :- A situation when all the people in the working age group are actually engaged in some gainful employment
Option:-
Q :- Institutions that engage in mobilisation and allocation of savings
Solution:- Financial Institutions by engaging in mobilisation and allocation of savings, act as a channel between the savers and borrowers of funds.
Q :- Which statutory body is having power regarding stock market
Q :- LPG stands for
A. Liberalisation, Privatisation, Globalisation
B. Liberalisation, Performance, Globalisation
C. Liberalisation, Privatisation, Growth
D. Liberalisation, Performance, Growth
Q :- The main source of foreign capital in India is
Q :- Fiscal deficit is that part of total government expenditure which is met by
Solution:Fiscal deficit arises when government expenditure is more than government revenue and therefore the balance is met through borrowings.
Q :- In which among the following year the MRTP act become effective
Solution :- MRTP is abbreviation of Monopolies and Restrictive Trade Practices Act, it was first launched in 1970. The act was launched to minimise control in few hands, the act made sure that giant business houses did not misuse their powers.
Q :- LQP raj refers to
Solution:The license, quota, permit raj was the elaborate system of licences, regulations and accompanying red tape that were required to set up and run businesses in India between 1947 and 1990. The New Economic Policy (NEP) aimed at replacing LQP raj by liberalisation, privatisation and globalisation (LPG) policies.
Q :-Foreign exchange reserves mean
Solution :- Foreign Exchange Reserves refer to the stock of foreign currencies held by the central bank of the country.
Q :- Market in which the securities of government and public companies are traded
Solution:Stock exchange is an organised and regulated financial market where securities are bought and sold at prices governed by the forces of demand and supply.
Q :- Agreement made between more than two nations regarding exchange of goods and services
Solution :-Multilateral trade agreements are commerce treaties between more than two nations. The agreements reduce tariffs and make it easier for businesses to import and export.
Q :- There are three industries which are reserved for the public sector except
Solution:Under the Reform policies introduced in and after 1991, only 3 industries were kept reserved for the public sector, i.e., defence equipments, atomic energy generation and railway transport.
Q :- Non-tariff barriers mainly include
Solution:Non tariff barriers include restrictions on both the quantity and quality of the commodity that can be imported. Commodities can be imported neither in a higher quantity nor of a lower quality than specified.
Q :- Inwards foreign direct investment is useful because
Solution :- Inwards foreign direct investment brings in foreign exchange, management expertise as well as modern technology.
Q :- In which major economic decisions (what to produce, how to produce and for whom to produce) are left to the free play of the market forces
Solution:Capitalist economy is the economy controlled by free play of market forces. Under such economics structure the sole focus of the producer is to earn maximum benefit. Social welfare is not awarded any concern, the only motive of such economy is maximum benefit or profit earning.’
Q :- The process of removal of import restrictions which began in 1991 completed in phased manner with the removal of restrictions on
Solution:After 1991, India’s trade policy was to encourage exports and removal of government control on imports. An important element of the changes in India’s trade policy was the removal of quantitative restriction on imports under which 715 items were freed of quantitative restrictions.
Q :-During the economic crisis, the World bank and IMF provided India a loan of
Solution:During the economic crisis, no country or financial lender was willing to lend to India. So, India approached the International Bank for Reconstruction and Development(IBRD), popularly known as the World Bank and the International Monetary Fund (IMF) and received $7 billion as loan to manage the crisis.
Q :-When expenditure is more than income
Solution:When expenditure is more than income, the excess is known as deficit.
Q :-Which of the following is an example of direct tax
Q :- PSU is
Solution:PSU stands for Public Sector Undertaking. These are also known as Public Sector Enterprises. It is the name given to the state owned enterprises in India.
Q :-When government disinvests its shares to the extent of 5 to 10 percent to meet the deficit in the budget, this is termed as
Solution:Token privatisation, also known as deficit privatisation occurs when the government disinvests its share to the extent of 5 to 10 percent to meet the deficit in the budget.
Q :- Selling off the share of public sector companies to the private individuals and institutions is known as
Solution:Privatisation of the public sector enterprises by selling off part of the equity of PSEs to the general public or private entities is known as disinvestment.
Q :- Socialist economy
Solution:Socialist economy means the system under which economic system is controlled and regulated by the government so as to ensure welfare and equal opportunity to the people in a society. It refers to the government ownership of the means of production, planning and income distribution by the government.
Q :- Main organisation for facilitating globalisation
Solution :- WTO is expected to establish a rule based trading regime in which nations cannot place arbitrary restrictions on trade. It facilitates international trade through removal of tariff and non tariff barriers.
Q :- Opening up the Indian economy to foreign investors and allowing Indian investors to invest abroad
Solution :- Globalisation is the integration of the domestic economy with the rest of the world through trade and capital (investment) flows.
Q :- A company hires regular services from external sources mostly from other countries which were previously provided internally
Q :- teps taken towards liberalisation
Solution:To liberalise the Indian economy, industrial licensing was abolished, many industries reserved for the public sector were dereserved and import
Solution:World Trade Organisation (WTO) started functioning on 1st January 1995 as the successor organisation to the General Agreement on Trade and Tariff (GATT).
Q :- Which of the following is not one among the Maharatnas PSU’s
Solution:The company which was founded as Videsh Sanchar Nigam Limited (VSNL) in 1986 is not one among Maharatna PSUs.
Q :- CRR is
Solution:Cash Reserve Ratio (CRR) is the amount of funds that the banks have to keep with the RBI.
Q :- Self reliance means
A. None
B. Reducing inequality of income
C. Adaptation of new technology
D. Reducing the dependence on imports
Solution:Self reliance means that an economy is not totally dependent on imports and is able to meet its requirements through domestic production.
Q :- IBRD stands for
Solution:IBRD stands for International Bank for Reconstruction and Development, and is popularly known as the World Bank. It was established in 1944 with the mission of financing the reconstruction of European Nations devastated by the World War II.
Q :-Monetary policy is the policy of
Solution:Monetary policy is the macroeconomic policy laid down by the central bank of the country.
Q :- Sale tax and excise duty are examples of
Solution:Sales tax and excise duty are examples of indirect taxes as these are to be paid by the producers or sellers of the commodity but the ultimate burden of the tax rests on the customer.
Q :- Two services outsourced from India are
Solution:Both voice based business process services as well as banking services are being outsourced by companies in developed countries from India.
Q :- The commercial banks are required to keep certain percentage of the deposits they accept from public in the form of cash. This percentage is known as
Solution:Statutory Liquidity Ratio (SLR) is a reserve requirement under which the commercial banks are required to keep a certain percentage of the total deposits in the form of cash.
Q :- Fiscal policy of the government
Solution:Fiscal policy is the revenue (which comes from taxation) and expenditure policy of the government.
Q :- Reasons which highlight the importance to privatisation
Solution:Privatisation is important because the private capital and managerial capabilities can be effectively utilised to improve the performance of the PSUs and minimise wastages.
Q :- The main changes in fiscal policy are
Solution:Fiscal policy is the expenditure and revenue policy of the government. Reduction of quantitative restrictions on imports and exports led to the fall in taxes that the government used to collect and so it is a change in the fiscal policy.
Q :- Which policy do these changes belong to (i) SLR and CRR reduced by RBI to increase the availability of funds (ii) Bank rate reduced (iii) SEBI made statutory
Solution:Under the New Economic Policy (NEP), all of these changes were made to the monetary policy and the monetary policy was also disassociated from the fiscal policy.
A. Imposing more taxes
B. Selling shares held by government
C. Borrowings
D. All
A. Brings in modern technology
B. Brings in foreign exchange
C. Brings in management expertise
D. All
Answer: D (All)
A. Anti-private sector policy
B. Pro-private sector policy
C. Anti-public sector policy
D. Pro-public sector policy
A. Decline in private monopoly
B. Favour the objective of social welfare
C. Reduce the cost by minimising wastages
D. Increase employment due to exit policy for sick public enterprises
A. All of these
B. Quantitative restrictions on import and exports reduced
C. System of fixed exchange rate converted into market determined exchange rate
D. Use of foreign exchange made more liberal
A. None
B. Foreign trade policy
C. Fiscal policy
D. Monetary policy
A. All of these
B. Reduce the role of government
C. Removing restrictions on private sectors
D. Remove trade restrictions
A. Decline in foreign exchange reserve
B. Increase in foreign exchange reserve
C. No change in foreign exchange reserve
D. All of these
A. LLP raj
B. LPG raj
C. LQG raj
D. LQP raj
A. Lifting of regulations on interest rate of deposit
B. Liberalisation of branching regulations for both private and public sector banks
C. Delicensing of industries
D. Reduction of barriers for entry of private banks
A. Textile industries
B. Consumer goods industries
C. IT industries
D. Hazardous and environmentally sensitive industries
Q :- Liberalisation leads to some limitation
A. Lesser participation of foreign investors
B. It neglects the social welfare
C. No improvement in productivity
D. No improvement in financial sector
A. All of these
B. Quantitative restrictions on import and exports reduced
C. Use of foreign exchange made more liberal
D. System of fixed exchange rate converted into market determined exchange rate
(B) Due to adverse BOP
(C) Rise in prices
(D) All of the above
(B) 1990-91
(C) 1995
(D) 1975
(B) $10 billion
(C) $7 billion
(D) $20 billion
(B) 6
(C) 9
(D) 10
(B) 10
(C) 2
(D) 4
(B) 1 crore
(C) 25 lakh
(D) 75 crore
(B) 2001
(C) 2005
(D) 2006
(B) 120
(C) 96
(D) 48
(B) 1998
(C) 2000
(D) 1995
Answer: (D) 1995
Q :- Where is the headquarters of WTO located?
(A) Italy
(B) Geneva
(C) New York
(D) Washington
Answer: (B) Geneva
Q :- The reason due to which multinational companies set-up their branches in other countries is
(a) cheap labour and resources
(b) welfare motive
(c) to generate employment
(d) to generate income
Ans : (a) cheap labour and resources
Q :- Globalisation will result in:
(a) more competition among producers
(b) less competition among producers
(c) no change in competition among producers
(d) none of the above
Ans : (a) more competition among producers
Q :- Till which time period, production was organised within the countries?
(a) Middle of twentieth century
(b) End of twentieth century
(c) Starting of twentieth century
(d) Till nineteenth century
Ans : (a) Middle of twentieth century
Q :- An important factor causing globalisation is
(a) more income
(b) rxpansion of markets
(c) yechnological developments
(d) urbanisation
Ans : (c) yechnological developments
Q :- Choose the reason for which MNCs are attracted to India for investments.
(a) India has educated English speaking people
(b) India has skilled professionals
(c) India has lot of natural resources
(d) All of the above
Ans : (d) All of the above
Q :- Globalisation has led to improvement in living conditions:
(a) of all the people
(b) of people in the developed countries
(c) of workers in the developing coutries
(d) none of the above
Ans : (c) of workers in the developing coutries
Q :- Why did the Indian Government restricted foreign trade after independence?
(a) To protect domestic producers
(b) To increase competition
(c) To know the international level of quality
(d) All of the above
Ans : (a) To protect domestic producers
Q :- A situation in which all the countries reap equally the benefits of foreign trades equally is known as
(a) Internationalisation (b) Fair globalisation
(c) Liberalisation (d) Equal globalisation
Ans : (b) Fair globalisation
Q :- To check the free flow of Chinese goods in the Indian markets, what the Indian government can do?
(a) Ban trade with China(b) Impose tax on imports
(c) Impose tax on exports
(d) Complain to UNO
Ans : (b) Impose tax on imports
Q :- BPOs have benefited growth of:
(a) local companies (b) national companies
(c) MNCs (d) none of these
Ans : (c) MNCs
Q :- The past two decades of globalisation has seen rapid movements in:
(a) goods, services and people between countries
(b) goods, services and investments between countries
(c) goods, services and people between countries
Ans : (b) goods, services and investments between countries
Q:- In earlier times, trade consisted of which of the following things?
(a) Finished goods (b) Raw materials
(c) Food stuffs (d) All of these
Ans : (d) All of these
Q :- Uder liberal policy there has been removal of:
(a) restrictions (b) license
(c) trade (d) both (a) and (b)
Ans : (a) all of the above
Q :- The money spent on buying assets such as land, building, machinery etc is known as
(a) capital (b) rent
(c) investment (d) production
Ans : (c) investment
Q :- Improvement in transport has helped in promotion of:
(a) globalisation (b) liberalisation
(c) privatisation (d) none of these
Ans : (a) globalisation
Q :- A company that owns or controls production in more than one country is called
(a) big company
(b) international company
(c) foreign company
(d) multinational company
Ans : (d) multinational company
Q :- Tata Steel is an:
(a) American MNC (b) Indian MNC
(c) Chinese MNC (d) none of these
Ans : (b) Indian MNC
Q :- Enabling producers of one country to sell their goods in other countries is known as
(a) globalisation (b) trade
(c) foreign trade (d) international trade
Ans : (c) foreign trade
Q :- Foreign trade gives more number of choices for
(a) producers (b) sellers
(c) buyers (d) government
Ans : (c) buyers
Q :- In the competition between Indian and Chinese toys in Indian markets, China proved better because of
(a) low price and variety
(b) good shape
(c) trade relations
(d) shigh price and quality
Ans : (a) low price and variety
Q :- The most common route for investments by MNCs in countries around the world is to:
(a) set up new factories
(b) buy existing local companies
(c) form partnerships with local companies
Ans : (b) buy existing local companies
Q :- The process of rapid integration or interconnection between countries due to greater foreign investment and foreign trade is known as
(a) Integration of markets (b) International trade
(c) MNC (d) Globalisation
Ans : (d) Globalisation
FILL IN THE BLANKS of New Economic Reforms in 1991
1. India met with an economic crisis in 1991 as it failed to repay its _______ from abroad.
Answer: borrowings
2. _______ is the excess of expenditure (borrowings) over income
Answer: Deficit
3. To overcome the crisis, India approached IMF and World Bank for _________
Answer: loan
4. Economic reforms refer to all those measures that aim at rendering the economy more
efficient, competitive and _________
Answer:
5. Fiscal policy refers to the revenue and expenditure policy of the government to achieve
_______ development in the economy.
Answer: RBI
6. Financial sectors were allowed to take decisions on various matters, without consulting ________
Answer: increase
7. India has become an important destination for global ______ since the reforms.
outsourcing
Answer:
8. Trade between two countries is called ________ trade.
Answer: bilateral
9. The industrial sector has experienced _______ in growth pattern.
Answer: fluctuations
10. Another name for the World Bank is ………. .
Ans : IBRD
11. ………. owns or controls production in more than one nation.
Ans : MNC
12. Special Economic Zones are being set up by ………. and ………. governments.
Ans : Central, State
13. ………. monitors the liberalisation of trade at international level.
Ans : WTO
14. Exports now finance over 80% of imports, as compared to 60% in 1985. This situation is
because of ………. .
Ans : Globalisation
15. Another name for the World Bank is ………. .
Ans : IBRD
16. ………. owns or controls production in more than one nation.
Ans : MNC
17. Special Economic Zones are being set up by ………. and ………. governments.
Ans : Central, State
18. ………. monitors the liberalisation of trade at international level.
Ans : WTO
19. Exports now finance over 80% of imports, as compared to 60% in 1985. This situation is
because of ………. .
Ans : Globalisation
20. _________ was the Finance Minister when India accepted the Liberalization policy for Industrialization in 1991.
(A) P.V. Narasimha Rao
(B) Dr. Manmohan Singh
(C) Morarji Desai
(D) P. Chidambaram
Answer: Option – B (Solution Below)
Solution:-
The correct answer is Dr. Manmohan Singh.
- Dr. Manmohan Singh:
- He was the 22nd Finance minister of India under the prime ministership of P. V. Narasimha Rao from 1991 to 1996.
- He was also served as Prime minister of India two times i.e 2004 to 2009 and 2009 to 2014.
- P. V. Narasimha Rao:
- He was the 12th Prime minister of India from 1991 to 1996.
- The liberalization policy of India (1991) came into action during his tenure.
- Morarji Desai:
- He was the 6th Prime minister of India from 1977 to 1979.
- He was the 2nd Deputy Prime minister of India from 1967 to 1969.
- He was also served as the 6th and 9th Finance minister of India during 1959 – 1964 and 1967 – 1970 respectively.
- P. Chidambaram:
- He held the office of Finance minister of India three times as follows:
- 23rd Finance minister from 1996 – 1998.
- 26th Finance minister from 2004 – 2008.
- 28th Finance minister from 2012 – 2014.
21. ____ attempted to give more freedom to the entrepreneurs.
Solution:Liberalisation abolished industrial licensing under which every entrepreneur had to get permission from government officials to start a firm, close a firm or to decide the amount of goods that could be produced.
22. Liberalisation is ………. :
(a) more trade
(b) removing barriers or restrictions set by the government
(c) checking barriers by the government
(d) help by the government
Answer : B- removing barriers or restrictions set by the government
23. The demographic dividend occurs due to………
a. falling birth rate and consequent shift in the age structure.
b. falling birth rate and changes in the age structure towards the adult working ages.
c. falling death rate.
Options:
(A) Only b
(B) Only a
(C) Only c
(D) Only b and c
Answer: Option – A(Solution Below)
Solution:-
The correct answer is Only b.
- According to United Nations Population Fund (UNFPA), demographic dividend means, “the economic growth potential that can result from shifts in a population’s age structure, when the working-age population (15 to 64) is larger than the non-working-age of the population (14 and younger, and 65 and older)“.
- With fewer births each year, a country’s working-age population grows larger relative to the young dependent population.
State whether the following statements are true or false OF ECONOMIC REFORMS
1. Despite efficient management of the Indian economy, India faced an economic crisis in 1991.
Answer: False
2. The crisis led to a rise in the prices of essential goods.
Answer: True
3. Reserve Bank of India announced New Economic Policy as a condition to support the Indian economy.
Answer: False
4. Opening up the economy by removing restrictions on the private sector is called globalisation.
Answer: False
5. Industrial licensing was abolished on all products except on those which were important from a profit point of view.
Answer: False
6. The rupee was devalued to resolve the balance of payments crisis.
Answer: True
7. A fixed exchange rate system was adopted to avoid rigidity in the foreign exchange market.
Answer: False
8. Private ownership is capable of utilising capital and other resources more efficiently.
Answer: True
9. GATT is the successor to the WTO.
Answer: False
10. Opening up the economy resulted in a rapid increase in FDI and foreign exchange reserves
Answer: True
11. MNCs set up production units on the basis of proximity to the markets.
Ans : True
12. Foreign trade creates an opportunity for the retailers to reach beyond the domestic markets.
Ans : False
13. MNCs, who set up production units in SEZ, do not have to pay taxes for first five years.
Ans : True
14. Globalisation and competition among producers are beneficial to the government.
Ans : False
15. MNCs are playing a major role in the globalisation process.
Ans : True
Match the following. Options are as below OF ECONOMIC REFORMS
1.
Column-I | Column-II |
1. Economic Reforms | (A) 1995 |
2. Gulf Crisis | (B) 2005 |
3. WTO | (C) 1990-91 |
4. VAT | (D) 1991 |
5. GATT | (E) 1948 |
6. Liberalisation | (F) Sale of public sector shares |
7. Privatisation | (G) Abolition of licensing |
8. Globalisation | (H) Integration of domestic economy with rest of the world |
9. GST | (I) Stripping a currency unit |
10. Demonetization | (J) An indirect tax |
Answer:
Column-I | Column-II |
1. Economic Reforms | (D) 1991 |
2. Gulf Crisis | (C) 1990-91 |
3. WTO | (A) 1995 |
4. VAT | (B) 2005 |
5. GATT | (E) 1948 |
6. Liberalisation | (G) Abolition of licensing |
7. Privatisation | (F) Sale of public sector shares |
8. Globalisation | (H) Integration of domestic economy with rest of the world |
9. GST | (J) An indirect tax |
10. Demonetization | (I) Stripping a currency unit |
- a(ii), b(i), c(iii)
- a(ii), b(iii), c(i)
- a(iii), b(i), c(ii)
- a(i), b(ii), c(iii)
ASSERTION AND REASON OF ECONOMIC REFORMS
DIRECTION : Mark the option which is most suitable :‘
(a) If Both assertion and reason are true, and reason is the correct explanation of assertion.
(b) If Both assertion and reason are true, but reason is not the correct explanation of assertion.
(c) If Assertion is true, but reason is false.
(d) If Both assertion and reason are false.
1. Assertion : Global production has a complex structure.
Reason : Production of one good may take place in different parts of the world. For instance, an equipment may be formed by combining components produced in different countries.
Ans : (a) Both assertion and reason are true, and reason is the correct explanation of assertion.
Globalization leads to connectivity of different countries and goods and services can be transported across the world. Goods, components produced in different parts of the world can be used for production in any country.
2. Assertion : Local businesses may set up joint production process with MNCs and earn higher profits.
Reason : MNCs can provide money for additional investments, like buying new machines for faster production.
Ans : (a) Both assertion and reason are true, and reason is the correct explanation of assertion.
At times, MNCs set up production jointly with some of the local companies of the host countries. The benefit to the local company from such joint production is twofold as MNCs can provide for additional investments
and can bring in newer technology of production that result in fast-paced production.
3. Assertion : MNCs can exert a strong influence on production at distant locations.
Reason : MNCs set up partnerships with local companies, use local companies for supplies, compete witnqhe local companies or buy them up.
Ans : (a) Both assertion and reason are true, and reason is the correct explanation of assertion.
By setting up partnerships with local companies, by using the local companies for supplies, by closely competing with the local companies or buying them up,
MNCs are exerting a strong influence on production at distant locations. As a result, production in widely dispersed locations is getting interlinked.
4. Assertion : Foreign trade creates an opportunity for the producers to reach beyond the domestic markets.
Reason : Foreign trade expands the choice of goods beyond what is domestically produced.
Ans : (b) Both assertion and reason are true, but reason is not the correct explanation of assertion.
Foreign trade creates an opportunity for the producers to reach beyond the domestic markets and thus expands the choices available for consumers.
5. Assertion : Due to foreign trade, producers in different countries closely compete with each other.
Reason : Foreign trade leads to similar prices of good across boundaries, and the producers who do not offer competitive prices may lose the market share.
Ans : (a) Both assertion and reason are true, and reason is the correct explanation of assertion.
Due to foreign trade, producers in different countries closely compete with each other. This is because the price of similar goods tends to become equal in
different markets. Therefore, if a good is priced higher in domestic market, consumers may prefer importing it from another country at a lower price.
6. Assertion : Foreign trade and foreign investment results in disintegration of production across countries.
Reason : MNCs disrupt the production processes in domestic country.
Ans : (d) Both assertion and reason are false. The result of greater foreign investment and greater
foreign trade has been greater integration of production and markets across countries. When MNCs conduct joint business processes with local companies, the benefit to local companies is massive as they receive investment funds and exposure to different production techniques.
7. Assertion : Rapid improvement in technology has beenone major factor that has stimulated the globalization process.
Reason : Developing countries are likely to become at par with developed countries in terms of technological development due to globalization.
Ans : (b) Both assertion and reason are true, but reason is not the correct explanation of assertion.
Since globalization leads to movement of goods, services, people and technology across nations, developing countries are likely to become at par with developed countries in terms of technological development.
8. Assertion : A tax on imports makes the market for imported goods lucrative in terms of earning higher profits.
Reason : Taxes are imposed to ensure smooth trade between nations and higher tax revenues for the governments of the countries.
Ans : (d) Both assertion and reason are false.
Taxes increase the price of imported goods, and so the demand for imports is likely to go down. As a result, the profits of producers who sell imported goods are also likely to reduce. Governments impose taxei to regulate the amount and quality of goods that enter a nation and to protect domestic industry from foreign competition.
9. Assertion : The removal of barriers to trade is known as liberalization.
Reason : federalization of trade allows businesses to freely decide which goods to import and export.
Ans : (b) Both assertion and reason are true, but reason is not the correct explanation of assertion
The removal of barriers to trade is known asliberalization, and the businesses freely deciding which goods to import and export is an outcome of liberalization not a reason for liberalization.
10. Assertion : Globalization leads to increased competition in international and domestic markets.
Reason : Globalization also makes the consumers better off as they have a wider variety of goods to choose from at lower prices.
Ans : (b) Both assertion and reason are true, but reason is not the correct explanation of assertion.
Globalization leads to increased competition in international and domestic markets as there is free movement of goods, services, labour and funds across countries. Also, consumers are better off as they get better quality and increased variety of goods at lower prices.
NEW ECONOMIC REFORMS
NEW ECONOMIC REFORMS
NEW ECONOMIC REFORMS