Structure of the Indian Economy & Demographics (Part-I)

Total Questions: 50

41. Assertion (A): Ceiling on foreign exchange for a host of current account transaction heads was lowered in the year 2000. [2001]

Reason (R): There was a fall in foreign currency assets also.

(a) Both A & R are individually true & R is the correct explanation of A
(b) Both A & R are individually true but R is not the correct explanation of A
(c) A is true but R is false
(d) A is false but R is true

Correct Answer: (a) Both A & R are individually true & R is the correct explanation of A

Solution:Correct option is a. Both Assertion and Reason are correct and Reason is the correct explanation for Assertion.

42. The prices at which the government purchases food grains for maintaining the public distribution system and for building up buffer-stock is known as: [2001]

(a) minimum support prices
(b) procurement prices
(c) issue prices
(d) ceiling prices

Correct Answer: (c) issue prices

Solution:Up to 100% FDI allowed in respect of projects relating to electricity generation transmission and distribution other than atomic reactor power plants. There is no limit on the project cost and quantum of foreign direct investment.

43. With reference to Power Sector in India, consider the following statements: [2002]

1. Rural electrification has been treated as a Basic Minimum Service under the Prime Minister's Gramodaya Yojana

2. 100 percent Foreign Direct Investment in power is allowed without upper limit

3. The Union Ministry of Power has signed a Memoranda of Understanding with 14 States

Which of these statements is/are correct?

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

Correct Answer: (b) 1&2

Solution:Pradhan Mantri Gramodaya Yojana was launched in order to achieve the objective of sustainable human development at the village level. It has 6 components viz., primary health, Primary education, rural shelter, rural drinking water, nutrition and Rural electrification. Upto 100% FDI is allowed in respect of projects relating to electricity generation, transmission and distribution, other than atomic reactor power plants.

44. With reference to the Indian Public Finance, consider the following statements: [2002]

1. External liabilities reported in the Union Budget are based on historical exchange rates

2. The continued high borrowing has kept the real interest rates high in the economy

3. The upward trend in the ratio of Fiscal Deficit of GDP a recent years has an adverse effect on private investment

4. Interest payments is the single largest component of the non-plan revenue expenditure of the Union Government

Which of these statements are correct?

(a) 1, 2 & 3
(b) 1 & 4
(c) 2, 3 & 4
(d) 1, 2, 3 & 4

Correct Answer: (c) 2, 3 & 4

Solution:Public Finance in India also comes under the purview of a branch of economics which determines and assesses the policies of the Indian government stipulated in the annual finance budget. It identifies that types and consequences of tax measures and expenditure on citizens, institutions, and the entire economy. The upward trend in the ratio of Fiscal Deficit of GDP a recent years has an adverse effect on private investment. The continued high borrowing has kept the real interest rates high in the economy. Public finance identifies that types and consequences of tax measures and expenditure on citizens, institutions, and the entire economy.

45. Consider the following statements: [2002]

Full convertibility of the rupee may mean:

1. Its free float with the international currencies

2. Its direct exchange with any other international currency at any prescribed place inside and outside the country

3. It acts just like any other international currency

Which of these statements are correct?

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

Correct Answer: (d) 1, 2 & 3

Solution:Capital account convertibility means free conversion of cross-border capital flows, implying that anybody can convert domestic currency into hard currency at the market rate and take the hard currency out of the country.

46. Consider the following statements: [2003]

In India, stamp duties on financial transactions are:

1. levied and collected by the State Government

2. appropriated by the Union Government

Which of these statements is/are correct?

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

Correct Answer: (d) Neither 1 nor 2

Solution:Stamp duty is a form of tax that is levied on documents. It is levied by the union or the central government and collected and appropriated by the state governments. (Entry 91 in the union list; entry 63 in the state list of Seventh Schedule of Constitution of India.

47. Which one among the following States has the highest female literacy rate as per the Census 20012 ? [2003]

(a) Chhattisgarh
(b) Madhya Pradesh
(c) Orissa
(d) Rajasthan

Correct Answer: (a) Chhattisgarh

Solution:As per the census of 2001, Chhattisgarh has the highest female literacy of 51.85, Orissa has 50.51%, Madhya Pradesh 50.29 and Rajasthan has 43.85%.

48. Which of the following is not a recommendation of the task force on direct taxes under the chairmanship of Dr. Vijay L. Kelkar in the year 2002? [2004]

(a) Abolition of Wealth Tax
(b) Increase in the exemption limit of personal income to Rs. 1.20 lakh for widows
(c) Elimination of standard deduction
(d) Exemption from tax on dividends and capital gains from the listed equity

Correct Answer: (b) Increase in the exemption limit of personal income to Rs. 1.20 lakh for widows

Solution:Increase in exemption limit to Rs I lakh to for the general categories of taxpayers. A higher exemption limit of Rs 1.50 lakh for widows and senior citizens was one of the recommendation of the task, force on direct taxes under the chairmanship of Dr. Vijay. Kelkar in the year 2002.

49. As per 1991 Census, which one of the following groups of Union Territories had the highest literacy rate? [2004]

(a) Chandigarh and Dadra & Nagar Haveli
(b) Delhi and Andaman & Nicobar Islands
(c) Andaman & Nicobar Islands and Pondichery
(d) Pondicherry and Delhi

Correct Answer: (d) Pondicherry and Delhi

Solution:As per 1991 census, Pondicherry and Delhi had the literacy rates of 75.3 and 74.7 respectively.

50. Consider the following statements: [2004]

As per 2001 Census

1. the two States with the lowest sex ratio are Haryana and Punjab

2. the two States with the lowest population per sq. km. of area are Meghalaya and Mizoram

3. Kerala has both the highest literacy rate and sex ratio

Which of the statements given above is/are correct?

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

Correct Answer: (d) 1 & 3

Solution:As per census 2001, child sex ratio in Haryana was 861, in Punjab 876 and in Sikkim 875. Hence, Haryana and Sikkim were the two states with lowest sex ratios.

The population per sq. km. of area in Arunachal Pradesh was 13, in Meghalaya was 103 and in Mizoram was 42. Hence, the two states with the lowest population per sq. km of area are Arunachal Pradesh and Mizoram.

Kerala has both the highest literacy rate and sex ratio.

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