Sinhgad Institute of Business

Administration & Computer

Application (SIBACA)

NOTES FOR
MBA - Semester: IV
(Specialization IB)
Course Code: 404IB
Type: Subject – Core

Course Title: Indian Economy and

Trade Dependencies

BY:
Dr. Bhati Rakesh Kumar

Dr. Bhati Rakesh (Indian Economy and Trade Dependencies) 1

 OBJECTIVE QUESTIONS AND ANSWERS
1) In which year Reserve Bank of India was
nationalised?
A) 1935 B) 1942 C) 1949 D) 1952
2) The observation that 'Supply creates its own
demand' is popularly called?
A) Say's Law B) Greham's Law C) Murphy's Law
D) Newton's Law
3) What was the main objective of Green
Revolution in India ?
A) To increase the extent of cash crop cultivation
B) To increase the area of green forests under social
forestry scheme
C) Modernisation of agriculture through science and
technology
D) To introduce the Japanese method of paddy
cultivation
4) ____ is the ex-officio chairman of Planning
Commission and National Development Council.
A) Prime Minister B) President
C) Finance Minister D) Commerce Minister
5) 70% of working population of India is engaged
in:
A) public sector B) primary sector
C) secondary sector D) tertiary sector
6) A closed economy is an economy in which:
A) the money supply is fully controlled
B) deficit financing takes place
C) only exports take place
D) neither exports nor imports take place
7) A good method of providing employment to
rural labor and utilizing it fully is through?
A) Rural industries B) Agriculture
C) Public works programmes D) Cattle rearing
8) A hammer in the hands of a housewife is a
_________ good.
A) capital B) free C) intermediary D) consumer
9) A high rate of inflation tends to worsen
balance of payments because:
A) prices of imported goods rise
B) prices of exported goods rise making exports less
competitive
C) prices of imported goods fall and hence more is
imported
D) prices of exported goods fall and hence less
amount is obtained in terms of foreign exchange
10) A non-performing asset is
A) Money at call and short notice
B) Cash balance with the bank
C) Cash balance with the RBI
D) An asset that ceases to generate income
11) A rolling plan was a plan for:
A) one year B) three years
C) five years D) four years
12) A Scheduled Bank is one which is included in
the:
A) II Schedule of Banking Regulation Act
Dr. Bhati Rakesh (Indian Economy and Trade Dependencies)
B) II Schedule of Constitution
C) II Schedule of Reserve Bank of India Act
D) None of these
13) A steady increase in the general level of
prices as a result of excessive increase in
aggregate demand as compared to aggregate
supply is termed as :
A) demand-pull inflation B) cost-push inflation
C) stagflation D) structural inflation
14) A very rapid growth in prices in which
money loses its value to the point where even
barter may be preferable is known as:
A) inflation B) hyper-inflation
C) deflation D) disinflation
15) Absolute Poverty means:
A) poverty in terms of absolute number of people
B) poverty in terms of the basic minimum calorie
requirements
C) poverty in terms of the prevailing price level
D) poverty in terms of the absolute level of
unemployment
16) According to the law of demand, when Price?
A) Decreases, demand decreases
B) Decreases, demand does not change
C) Increases, demand decreases
D) Increases, demand increases
17) Among the reasons for disguised
unemployment in the rural areas is :
A) choice of a heavy industry model for economic
development
B) low levels of technological development in the
country
C) heavy pressure of population along with slow
implementation of land reforms
D) high illiteracy rate
18) Among the remedies of inflation we cannot
include:
A) better capacity utilisation
B) lowering bank rate
C) reducing budgetary deficit
D) an efficient public distribution system
19) Amongst the currency quotes USD/JPY,
USD/Euro and USD/CAD, which one of the
following is referred as the base currency for
quotes?
A) US $ B) JPY C) Euro D) CAD
20) An ad valorem duty is a tax on the basis of?
A) The unit of the commodity
B) The advertisement expenditure
C) The price of a commodity
D) None of these
21) An economy is in equilibrium when
A) Planned consumption exceeds planned saving
B) Planned consumption exceeds planned
investment
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C) Intended investment equals intended saving
D) Intended investment exceeds intended saving
22) An essential attribute of inflation is:
A) fall in production
B) increase in prices
C) absence of black market
D) presence of black market
23) An increase in the quantity supplied
suggests?
A) a rightward shift of the supply curve
B) a leftward shift of the supply curve
C) a movement up along the supply curve
D) a movement down the supply curve
24) As on 2013, Foreign Direct Investment(FDI)
ceilings in the telecom sector is?
A) 49 percent
B) 50 percent
C) 75 percent
D) 100 percent
25) Bank rate is the rate at which:
A) a bank lends to the public
B) the Reserve Bank of India lends to the public
C) the Government of India lends to other countries
D) the Reserve Bank of India gives credit to
commercial banks
26) Banks in India are required to maintain a
portion of their demand and time liabilities with
the Reserve Bank of India. This portion is called
A) Statutory Liquidity Ratio
B) Reverse Repo
C) Bank Deposit
D) Cash Reserve Ratio
27) Black money is :
A) counterfeit currency
B) illegally earned money
C) money earned through underhand deals
D) income on which payment of tax is usually
evaded
28) Broad money in India is :
A) M1 B) M2 C) M3 D) M4
29) Capital output ratio of a commodity
measures
A) Its per unit cost of production
B) The amount of capital invested per unit of output
C) The ratio of capital depreciation to quantity of
output
D) The ratio of working capital employed to
quantity of output
30) Consequent upon the recommendations of
the Working Group on Rural Banks, 5 Rural
Regional Banks were initially set up in the year:
A) 1973 B) 1974 C) 1975 D) 1976
31) Consumer's surplus is the highest in the case
of ?
A) necessities
B) comforts
C) luxuries
D) durable goods
Dr. Bhati Rakesh (Indian Economy and Trade Dependencies)
32) Convertibility of the rupee implies:
A) being able to convert rupee notes into gold
B) freely permitting the conversion of rupee to other
major currencies and vice versa
C) allowing the value of the rupee to be fixed by
market forces
D) developing an international market for currencies
in India
33) Cyclical unemployment refers to:
A) seasonal unemployment
B) disguised unemployment
C) voluntary unemployment
D) unemployment during recessionary phase of a
trade cycle
34) Dadabhai Naoroji theorised on the drain of
wealth from India in his book:
A) Poverty under British Rule in India
B) Poverty in British Rule in India
C) Poverty and Un-British Rule in India
D) Poverty of Economic Drain in British India
35) To prevent recurrence of scams in Indian
Capital Market, the Government has assigned
regulatory powers to:
A) RBI
B) SBI
C) SEBI
D) ICICI
36) Debenture holders of a company are its?
A) Creditors
B) Debtors
C) Shareholders
D) Directors
37) Deficit financing creates additional paper
currency to fill the gap between expenditure and
revenue. This device aims at economic
development but if it fails, it generates :
A) inflation
B) devaluation
C) deflation
D) demonetization
38) Deficit financing implies?
A) Public expenditure in excess of public revenue
B) Replacing new currency with worn out currency
C) Public revenue in excess of public expenditure
D) Printing new currency notes
39) Deficit financing leads to inflation in general,
but it can be checked if?
A) Only aggregate demand is increased
B) Government expenditure leads to increase in the
aggregate supply in ratio of aggregate demand
C) All the expenditure is denoted national debt
payment only
D) All of these
40) Deficit Financing means that the government
borrows money from the?
A) Reserve Bank of India
B) Asian Development Bank
C) World Bank
D) International Monetary Fund
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41) Demand in Economics means 51) Economic Planning is a subject:
A) Market demand A) in the Union List
B) Individual demand B) in the State List
C) Demand backed by purchasing power C) in the Concurrent List
D) Aggregate demand D) unspecified in any special list
42) Depreciation means? 52) Economic planning is an essential feature of ?
A) Closure of a plant due to labour trouble A) Dual economy
B) Destruction of a plant in a fire accident B) Mixed economy
C) Loss of equipment over time due to wear and tear C) Socialist economy
D) Closure of a plant due to lock out D) Capitalist economy
43) Devaluation means: 53) 'Economic Planning' refers to ?
A) converting rupee into gold A) The allocation of resources
B) lowering of the value of one currency in B) The planning of manpower
comparison of some foreign currency C) The mobilisation of both taxes and manpower
C) making rupee dealer in comparison to some D) The mobilisation of taxes
foreign currency 54) Economic survey is published by :
D) None of these A) Ministry of Finance
44) Devaluation of currency by a country is B) Planning Commission
meant to lead to : (1) expansion of import trade, C) Govt. of India
(2) promotion of import substitution, (3) D) Indian Statistical Institute
expansion of export trade. 55) Equilibrium of the monopolistic firm
A) 1 only B) 2 and 3 C) 1 and 2 D) 1 and 4 A) necessarily is profitable
45) Devaluation of currency leads to? B) occurs where P = MC
A) Erratic fluctuations in domestic prices C) occurs where MR = MC
B) No impact on domestic prices D) occurs where P = MR
C) Increase in domestic prices 56) Estimates of national income in India are
D) Fall in domestic prices prepared by the?
46) Development expenditure of the Central A) Ministry of finance
government does not include? B) Reserve bank of India
A) Expenditure on economic services C) Central statistical organization
B) Defence expenditure D) Planning commission
C) Grant to states 57) Excise Duty is a tax levied on the?
D) Expenditure on social and community services A) export of goods
47) Disguised unemployment in India is mainly B) import of goods
related to : (1) agricultural sector, (2) rural area, C) production of goods
(3) factory sector, (4) urban area. D) sale of goods
A) 1 and 2 58) EXIM Bank was set-up in the year:
B) 1 and 3 A) 1980 B) 1982 C) 1985 D) 1987
C) 2 and 4 59) Fiscal Deficit in the Union Budget means?
D) 3 and 4 A) The sum of budgetary deficit and net increase in
48) During which 5-year Plan did prices show a internal and external borrowings
decline? B) The sum of monetized deficit and budgetary
A) First deficit
B) Third C) The difference between current expenditure and
C) Fifth current revenue
D) None of these D) Net increase in Union Government borrowings
49) During which Five Year Plan was the total from the RBI
expenditure on agriculture the highest? 60) Fiscal Policy is connected with?
A) First Five Year Plan A) exports and imports
B) Second Five Year Plan B) Issue of currency
C) Third Five Year Plan C) public revenue and expenditure
D) Fourth Five Year PIan D) None of these
50) During which Plan period did agricultural 61) For internal financing of Five Year Plans, the
production register a negative growth? government depends on:
A) First A) taxation only
B) Second B) taxation and public borrowing
C) Third C) public borrowing and deficit financing
D) Fourth D) taxation, public borrowing and deficit financing

Dr. Bhati Rakesh (Indian Economy and Trade Dependencies) 4

62) For regulation of the Insurance Trade in the
country the Government has formed:
A) SEBI
B) Reserve Bank of India
C) Insurance Regulatory and Development
Authority
D) General Insurance Corporation
63) Fresh evaluation of every item of expenditure
from the very beginning of each financial year is
called ?
A) Fresh Budgeting
B) Deficit Budgeting
C) Performance Budgeting
D) Zero-based Budgeting
64) From which country India adopted the Five
Year Plans?
A) USSR B) USA C) Australia D) Germany
65) Gilt-edged market means?
A) Market of government securities
B) Bullion market
C) Market of commodities
D) Market of pure metals
66) Globalisation of Indian Economy means:
A) stepping up external borrowings
B) establishing Indian business units abroad
C) having minimum possible restrictions on
economic relations with other countries
D) giving up programmes of import substitution
67) Goa's economy is mainly based on ?
A) Export of ores
B) Tourism
C) Agriculture
D) None of these
68) Government imposes taxes to ?
A) Run the machinery of state
B) Uplift weaker sections
C) Check the accumulation of wealth among the
rich
D) None of these
69) Gross domestic capital formation is defined
as?
A) Expenditure incurred on physical assets only
B) Production exceeding demand
C) Flow of expenditure devoted to increased or
maintaining of the capital stock
D) Net addition to stock after depreciation
70) Gross Domestic Product (GDP) is the
monetary value of?
A) goods for the market and for self consumption
B) stock of goods and services
C) all final goods and services produced in a year
D) goods produced for the markets only
71) Growth rate of population means
A) The difference of growth between male and
female.
B) The difference in population between urban and
rural area.
C) The number of births per thousand people.
D) The difference between birth and death rates.
Dr. Bhati Rakesh (Indian Economy and Trade Dependencies)
72) Hard Currency is defined as currency:
A) which can hardly be used for international
transactions
B) which is used in times of war
C) which loses its value very fast
D) traded in foreign exchange market for which
demand is persistently relative to the supply
73) If the price of an inferior good falls, then its
demand
A) Rises
B) Falls
C) Remains constant
D) Can be any of these
74) If the RBI adopts an expansionist open
market operations policy, this means that it will?
A) Openly announce to the market that it intends to
expand credit
B) Sell securities in the open market
C) Offer commercial banks more credit in the open
market
D) Buy securities from non-government holders
75) In a free economy, inequalities of income are
mainly due to ?
A) Free competition
B) Private property and inheritance
C) Differences in the marginal productivity of
labour
D) Private property only
76) In equilibrium, a perfectly competitive firm
will equate
A) Marginal social cost with marginal social benefit
B) Market supply with market demand
C) Marginal profit with marginal cost
D) Marginal revenue with marginal cost
77) In estimating the budgetary deficit, the
official approach in India is to exclude
A) Long term borrowings from the market
B) Borrowings from the Reserve Bank of India
C) Drawing down of the cash balance
D) Borrowings from Reserve Bank in the form of
ways and means advance
78) In general our five year plans aim at making
our country to attain the status of a/an?
A) Rich country
B) Developed country
C) Self sufficient country
D) Industrially advanced country
79) In India largest share of revenue comes
from?
A) Direct Taxes B) Excise Duties
C) Sales Tax D) None of these
80) In India which of the following measures of
Money denotes the Broad Money ?
A) M1 B) M2 C) M3 D) M4
81) In India, the bank NABARD does not
provide refinance to :
A) Scheduled Commercial Banks
B) Regional Rural Banks
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C) Export-Import Banks A) treasury B) clearing house
D) State Land Development Banks C) collection centre D) dumping ground
82) In India, the first bank of limited liability 92) In India, the Public Sector is most dominant
managed by Indians and founded in 1881 was: in?
A) Hindustan Commercial Bank A) Steel production
B) Oudh Commercial Bank B) Organised term lending financial institutions.
C) Punjab National Bank C) Transport
D) Punjab and Sind Bank D) Commercial banking
83) In India, which of the following have the 93) In India, which of the following affects
highest share in the disbursement of credit to poverty line the most?
agriculture and allied activities? A) Quantum of gold reserve
A) Commercial Banks B) Per capita income
B) Cooperative Banks C) Production quantum
C) Regional Rural Banks D) Level of prices
D) Microfinance Institutions 94) In the context of India's Five Year Plans, a
84) In India, Inflation is measured by the? shift in the pattern of industrialization, with
A) National Income Deflation lower emphasis on heavy industries and more on
B) Consumers Price Index for agriculture workers infrastructure begins in:
C) Consumers Price Index for urban non-manual A) fourth Plan B) sixth Plan
workers C) eighth Plan D) tenth Plan
D) Wholesale Price Index number 95) In the last one decade, which one among the
85) In India, Paper Currency first started in the following sectors has attracted the highest
year? foreign direct investment(FDI) inflows into
A) 1774 B) 1810 C) 1852 D) 1861 India?
86) In India, present trend of rapid urbanisation A) Services sector
is due to: B) Insurance sector
A) lack of employment opportunities in rural areas C) Telecommunication
B) influence of cinema and electronic media D) Defence sector
C) break up of joint family system 96) In the second phase of nationalization of
D) abolition of zamindari system commercial banks, how many banks were
87) In India, present trend of rapid urbanisation nationalized?
is due to? A) 4 B) 6 C) 8 D) 10
A) Break up of joint family system 97) In the terms of economics, the recession
B) Abolition of zamindari system occurring two times with a small gap in between
C) Lack of employment opportunities in rural areas. is known as:
D) Influence of cinema and electronic media A) Double Deflation B) Deflation
88) In India, the concepts of Minimum Heeds C) Deep Recession D) Double Dip Recession
and Directed Anti-poverty Programmes were the 98) In the year 1969 how many banks were
innovations of: nationalised?
A) Fourth Five-year Plan A) 12 B) 14 C) 16 D) 18
B) Fifth Five-year Plan 99) In which of the Five Year Plans, preference
C) Sixth Five-year Plan was given to the weaker sections of the society?
D) Seventh Five-year Plan A) Second B) Third C) Fourth D) Fifth
89) In India, the first bank of limited liability 100) In which one of the following five year plans
managed by Indians and founded in the year the actual growth performance in India in
1881 was? respect of GDP (at factor cost) was less than the
A) Punjab National Bank target set?
B) Punjab and Sind Bank A) Sixth five year plan
C) Oudh Commercial Bank B) Seventh five year plan
D) Hindustan Commerical Bank C) Eighth five year plan
90) In India, the interest rate on savings accounts D) Ninth five year plan
in all the nationalised commercial banks is fixed
by
A) Finance Minister of India
B) Union Finance Commission
C) Indian Bank Association
D) Reserve Bank of India
91) The place where bankers meet and settle
their mutual claims and accounts is known as:

Dr. Bhati Rakesh (Indian Economy and Trade Dependencies) 6

Dr. Bhati Rakesh (Indian Economy and Trade Dependencies)
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