Poverty, Planning, Finance and Economic/Social Development (Part-I)

Total Questions: 50

21. Consider the following statements: [2000]

The Indian rupee is fully convertible:

1. in respect of Current Account of Balance of payment

2. in respect of Capital Account of Balance of payment

3. into gold

Which of these statements is/are correct?

(a) 1 alone
(b) 3 alone
(c) 1 & 2
(d) 1, 2 & 3

Correct Answer: (a) 1 alone

Solution:In respect of capital account of balance of payment, the indian rupee is partially convertible after 1991.

22. The growth rate of per capita income at current prices is higher than that of per capita income at constant prices, because the latter takes into account the rate of: [2000]

(a) growth of population
(b) increase in price level
(c) growth of money supply
(d) increase in the wage rate

Correct Answer: (b) increase in price level

Solution:The growth rate of per capita income at current prices is higher than that of per capita income at constant prices, because current prices are influenced by the effect of price inflation.

23. Consider the following: [2001]

1. Market borrowing

2. Treasury bills

3. Special securities issued to RBI

Which of these is/are components(s) of internal debt?

(a) 1 only
(b) 1 & 2
(c) 2 only
(d) 1, 2 & 3

Correct Answer: (d) 1, 2 & 3

Solution:Internal debt is that part of the total debt that is owed to lenders within the country. Market borrowings, Treasury bills and special securities issued to RBI are all sources of internal borrowings.

24. Global capital flows to developing countries increased significantly during the nineties. In view of the East Asian financial crisis and Latin American experience, which type of inflow is good for the host country? [2002]

(a) Commercial loans
(b) Foreign Direct Investment
(c) Foreign Portfolio Investment
(d) External Commercial borrowings

Correct Answer: (b) Foreign Direct Investment

Solution:FDI is defined as investment by a foreign multinational or its subsidiary or a foreign company in terms of setting up a project in another country either by way of a 100% subsidiary or by way of a joint venture. Thus, FDI investment is long term in nature. Thus, it can not be pulled out of the country at short notice. It is also non-debt creating.

25. Five Year Plan in India is finally approved by: [2002]

(a) Union Cabinet
(b) President on the advice of Prime Minister
(c) Planning Commission
(d) National Development Council

Correct Answer: (d) National Development Council

Solution:In India plans are formulated by Planning Commission and are finally approved by National Development Council. All state chief ministers are members of NDC. The NDC is headed by prime minister of India.

26. A country is said to be a debt trap if: [2002]

(a) it has to borrow to make interest payments on outstanding loans
(b) It has to abide by the conditionalities imposed by the International Monetary fund.
(c) it has been refused loans or aid by creditors abroad
(d) the World Bank charges a very high rate of interest on outstanding as well as new loans

Correct Answer: (b) It has to abide by the conditionalities imposed by the International Monetary fund.

Solution:A debt trap is a situation where countries or businesses or individuals are forced to take fresh loans to repay their existing loans. Such a situation arises when the income of a country or individual or company is not enough to clear its debt, while the interest on the outstanding loan amount starts to pile up quickly. This forces them to avail fresh loans to clear off the piled up interest, thereby falling into a debt trap. Hence, option b is correct.

27. Which one of the following is the correct statement? Service tax is a/an: [2006]

(a) direct tax levied by the Central Government.
(b) indirect tax levied by the Central Government.
(c) direct tax levied by the State Government.
(d) indirect tax levied by the State Government.

Correct Answer: (b) indirect tax levied by the Central Government.

Solution:All taxes which are the personal liability of an assessee come under direct taxes. They include income tax, professional tax, wealth tax, securities transaction tax, commodity transaction tax and the like. On the other hand, the taxes which a person can recover from some other person but the liability of which remains of the person collecting such taxes are indirect taxes. These are custom duty, excise, service tax, vat, CST and the like.

28. During which Five Year Plan was the Emergency clamped, new elections took place and the Janata Party was elected? [2009]

(a) Third
(b) Fourth
(c) Fifth
(d) Sixth

Correct Answer: (c) Fifth

Solution:This all happened from 1975-78 during fifth five year plan the period of which is (1974-78).

29. Consider the following statements regarding Indian Planning: [2009]

1. The Second Five-Year Plan emphasized on the establishment of heavy industries.

2. The Third Five-Year Plan introduced the concept of import substitution as a strategy for industrialization.

Which of the statements given above is/are correct?

(a) 1 only
(b) 2 only
(c) Both 1 & 2
(d) Neither 1 nor 2

Correct Answer: (c) Both 1 & 2

Solution:The second Five Year Plan heralded in a true sense the Socialist Project of the then Prime Minister, Jawaharlal Nehru. The economic policies of Nehru were heavily influenced by the erstwhile Union of Soviet Socialist Republics (USSR) which had followed the path of speedy industrialisation to expand the expand the manufacturing base of its economy. The Second Five year plan focused mainly on heavy industry as against the First plan which was essentially an agricultural plan. This was done to boost domestic production and manufacturing of goods. Third plan aimed to achieve self-sufficiency in food grains and to increase agricultural production to meet the requirements of industry and exports.

30. Which one of the following brings out the publication called "Energy Statistics" from time to time? [2009]

(a) Central Power Research Institute
(b) Planning Commission
(c) Power Finance Corporation Ltd.
(d) Central Statistical Organization

Correct Answer: (d) Central Statistical Organization

Solution:It is published by Ministry of Statistics and Programme Implementation, Central Statistical Organization.

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