Indian Economy General Knowledge Questions and Answers

This is the Part 1 general knowledge questions and answers section on “Indian Economy” with explanation for various interview, competitive examination and entrance test. Solved examples with detailed answer description, explanation are given and it would be easy to understand. 

indian economy questions answers

1. One of the reasons for India’s occupational structure remaining more or less the same over the years has been that
A. investment pattern has been directed towards capital intensive industries
B. productivity in agriculture has been high enough to induce people to stay with agriculture
C. ceiling on land holdings have enabled more people to own land and hence their preference to stay with agriculture
D. people are largely unaware of the significance of transition from agriculture to industry for economic development
Answer:
A. investment pattern has been directed towards capital intensive industries

2. Gross domestic capital formation is defined as
A. flow of expenditure devoted to increased or maintaining of the capital stock
B. expenditure incurred on physical assets only
C. production exceeding demand
D. net addition to stock after depreciation
Answer:
D. net addition to stock after depreciation

3. On July 12, 1982, the ARDC was merged into
A. RBI
B. NABARD
C. EXIM Bank
D. None of the above
Answer:
B. NABARD

4. Which of the following is the most appropriate cause of exports surplus?
A. Country’s exports promotion value
B. Country’s stringent import policy
C. Developments in national and international markets
D. None of the above
Answer:
C. Developments in national and international markets

5. If the cash reserve ratio is lowered by the RBI, its impact on credit creation will be to
A. increase it
B. decrease it
C. no impact
D. None of the above
Answer:
A. increase it

6. Which of the following items would not appear in a company’s balance sheet?
A. Value of stocks of raw materials held
B. Total issued capital
C. Revenue from sales of the company’s products
D. Cash held at the bank
Answer:
C. Revenue from sales of the company’s products

7. Our financial system has provided for the transfer of resources from the centre to the states; the important means of resource transfer are
A. tax sharing
B. grant-in-aids
C. loans
D. All the above
Answer:
D. All the above

8. Debenture holders of a company are its
A. shareholders
B. creditors
C. debtors
D. directors
Answer:
B. creditors

9. Excise duty is a tax levied on the
A. import of goods
B. export of goods
C. production of goods
D. sale of goods
Answer:
C. production of goods
Explanation:
What is Excise Duty? Is it collected by the State Government or the Central Government? How is it different from Sales Tax?
Excise duty is a tax on manufacture or production of goods. Excise duty on alcohol, alcoholic preparations, and narcotic substances is collected by the State Government and is called “State Excise” duty. The Excise duty on rest of goods is called “Central Excise” duty and is collected in terms of Section 3 of the Central Excise Act, 1944.
Sales Tax is different from the Excise duty as former is a tax on the act of sale while the latter is a tax on the act of manufacture or production of goods.

10. In pursuance with the recommendations of Narsimhan Committee, the RBI has framed new guidelines
A. to govern entry of new private sector banks to make the banking sector more competitive
B. to reduce the freedom given to banks to rationalize their existing branch network
C. to setup more foreign exchange banks
D. to lend more easily for industrial development
Answer:
A. to govern entry of new private sector banks to make the banking sector more competitive

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