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CBSE Questions for Class 8 General Knowledge Indian Economy Quiz 8 - MCQExams.com
CBSE
Class 8 General Knowledge
Indian Economy
Quiz 8
Economic growth is usually coupled with __________.
Report Question
0%
deflation
0%
inflation
0%
stagflation
0%
hyper inflation
Explanation
Economic growth results in higher disposable income available with the consumers which increases the overall demand along with the supply available for the consumers. This increase in demand spurs inflation, which eventually becomes a necessary evil for a growing economy.
Pradhan Mantri Jan-Dhan Yojana has been launched for _________.
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promoting women's Self-Help Groups in backward areas
0%
promoting financial inclusion in the country
0%
providing financial help to the marginalised communities
0%
providing housing loan to poor people at cheaper interest rates
Explanation
The scheme was launched in 2014; 1.5 crore schemes were opened on the first day under this scheme. It was launched to enable people access to banks and financial institutions
Which one of the following is correct about the Philips Curve of an economy?
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An inverse relationship between the rate of unemployment and the rate of inflation
0%
A directly proportionate of the rate of unemployment and the rate of the inflation
0%
An inverse relationship between the rate of GDP growth and the rate of inflation
0%
A directly proportionate of the rate of unemployment and the rate of unemployment
Explanation
Philips curve states an inverse relationship between the level of unemployment and rate of inflation. Greater economic growth results in more jobs and higher disposable income which increases the rate inflation and lowers unemployment. Reverse is true in recessionary periods and hence the curve.
Which one of the following is commonly occurred in the biflation in an economy?
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Inflation
0%
Deflation
0%
Disinflation
0%
Both 'a' and 'b'
Explanation
Condition of an economy wherein both inflation and deflation co-exist is called biflation. In such a scenario, usually commodity assets experience surge in prices while leveraged assets experience deflation.
Consider the following statements:
(1) Headline inflation may not present an accurate picture of the current state of the economy.
(2) Inflationary spikes occur when a particular section of the economy experiences a sudden price rise.
Which of the statements given above is/are correct?
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Only 1
0%
Only 2
0%
Both 1 and 2
0%
Neither 1 nor 2
Explanation
Headline inflation includes the inflation of all sectors and commodities, food and energy as well, which often experience inflationary spikes. It is for this reason that headline inflation may not present an accurate picture of the current state of economy. These inflation spikes are not there to stay all the time and hence distort the inflation numbers. Core inflation, however, does not include food and energy sectors in the measurement of inflation.
Which one of the following is related with the core inflation of an economy?
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Inflation which excludes certain items that face volatile price movements
0%
Inflation which includes certain items that face volatile price movements
0%
Inflation due to rise in the production of non-agricultural products
0%
Both 'a' and 'b'
Explanation
Core inflation excludes inflation in commodities which experience sharp transition in prices and are hence volatile in their price movements. These include food and energy which are excluded in the calculation of core inflation.
A rapid increase in the rate of inflation is sometimes attributed to the 'Base Effect'. What is the 'Base Effect'?
Report Question
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It is the impact of drastic deficiency in supply due to failure of crops.
0%
It is the impact of the surge in demand due to rapid economic growth.
0%
It is the impact of price levels of the previous year on the calculation of inflation rate.
0%
None of the above
Explanation
If the prices in the previous year are low then the inflation in the corresponding year spikes. This higher level of inflation can be attributed to much lower inflation in the previous year compared to the base year or base effect.
With reference to Indian economy, consider the following statements:
(1) Three types of Consumer Price Index are used in the determination of Consumer Price Index.
(2) Consumer Price Index of Industrial Worker and Consumer Price Index of Rural Labour has given same weight in the determination of inflation.
Which of the statements given above is/are correct?
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Only 1
0%
Only 2
0%
Both 1 and 2
0%
Neither 1 nor 2
Explanation
Three types of CPI indices are computed by the Central Statistics Officer (CSO) - CPI for industrial workers, CPI for agricultural or rural labourers and CPI for rural, urban and combined. The third type of inflation provides a better estimate of the inflation and hence is used for the CPI numbers.
Which one among the following is an appropriate description of deflation?
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It is a sudden fall in the value of a currency against other currencies
0%
It is a presistent recession in the economy
0%
It is persistent fall in the general price level of goods and services
0%
It is fall in the rate of inflation over a period of time
Explanation
When there is a continuous fall in the price levels of goods and services over a period of time, it is called deflation. Under such condition, the rate of inflation falls below 0%.
Which one of the following has been the main measure of the rate of inflation in India?
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0%
Consumer Price Index
0%
Consumer Price Index-Industrial worker
0%
Consumer Price Index-Agricultural labour
0%
Wholesale Price Index
Explanation
WPI or Wholesale Price Index is the measure of inflation in India unlike some other countries which use Consumer Price Index (CPI) to measure inflation. WPI basket in India comprises three groups: Primary commodities (20.1%), fuel and power (14.9%) and manufactured products (65%).
Consider the following statements:
(1) Disinflation is a decrease in the rate of inflation.
(2) In the disinflation, the inflation is falls below the zero percent level.
Which of the statements given above is/are correct?
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Only 1
0%
Only 2
0%
Both 1 and 2
0%
Neither 1 nor 2
Explanation
Disinflation is the fall in the rate of inflation, however, it does not fall below 0%. It just drops to levels lower than the level of inflation in the previous year and it is termed as disinflation.
Consider the following services/goods:
(1) Police
(2) National defence
(3) Tax subsidies
Which of the services/goods given above is/are included in the 'public goods' of an economy?
Report Question
0%
1 and 2
0%
1 and 3
0%
2 and 3
0%
Only 2
Explanation
A good or service which can be consumed by anyone without reducing its availability to others and no one is excluded of its consumption or services is called a public good. National defence and police are such services. Tax subsidies, on the other hand, are available to select people and its use reduces its availability to others.
Consider the following sectors
Animal husbandry
Dairy
Handlooms
Wasteland development
Social forestry
Sericulture
Which of the sectors given above are included in the skill development under Support to Training and Employment Programme (STEP) for Women Scheme?
Report Question
0%
1,2, 4, 5 and 6
0%
1,3, 5 and 6
0%
1, 4,5 and 6
0%
All of the above
Which one of the following is related with the Atkinson's Index of an economy?
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0%
A method to determine the income inequality
0%
An effect of supply-demand mismatch
0%
A method to determine the unemployment
0%
None of the above
Explanation
The Atkinson index is a measure of income inequality developed by British economist Anthony Barnes Arkinson. The measure is useful in determining which end of the distribution contributed most to the observed inequality.
Which one of the following is the nature of the Beveridge curve when there is a decrease in frictional unemployment that reduces the number of firms searching for employees and the number of unemployed searching for jobs?
Report Question
0%
The curve will become parabolic shape.
0%
The curve will become hyperbolic shape.
0%
The curve will be shifted towards origin.
0%
The curve will remain unchanged.
Consider the following statements:
(1) Tobin tax is a tax on all spot conversions of one currency into another.
(2) Tobin tax is a currency transaction tax to find a way to manage exchange rate volatility.
Which of the statements given above is/are correct?
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Only 1
0%
Only 2
0%
Both 1 and 2
0%
Neither 1 nor 2
Explanation
Tobin tax is applied to all spot exchange conversions of one currency into another. It is applied to all such short term transactions to discourage such trading which induces volatility in the currency.
Which of the following is not the function of Reserve Bank of India?
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Provide credit facility to the general public
0%
Keep government money in various account heads
0%
Frame monetary and credit policy
0%
All are RBI's functions
Explanation
RBI is also known as the banker's bank (as it lends to banks) and lender of last resort. It keeps government money in various account heads and frames monetary and credit policies. It also regulates the banking sector.
Providing credit to the general public is a job which is done by the commercial banks and not the RBI.
Which one of the following unemployment is the form of unemployment resulting from a mismatch between demand in the labour market and the skills and locations of the workers seeking employment?
Report Question
0%
Structural unemployment
0%
Marxian unemployment
0%
Disguised unemployment
0%
Classical unemployment
Which of the following terms indicates mechanism used by commercial banks for providing credit to Government?
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Cash Credit Ratio
0%
Debt Service Obligation
0%
Liquidity Adjustment Facility
0%
Statutory Liquidity Ratio
Explanation
Statutory Liquidity Ratio (SLR) is the mechanism used to by the RBI to regulate the liquidity of the commercial banks. Under SLR, commercial banks invest a certain percentage of their money in Government securities and other assets like gold so as to comply with RBI guidelines.
Which one of the following inflation is the type of inflation that results from past events and persists in the present?
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0%
Hyperinflation
0%
Sogflation
0%
Built-in inflation
0%
Biflation
Explanation
Some events in the past, such as a persistent demand pull or a supply shock (cost-push inflation) push the prices of goods and services upwards, and this persists for a long time. Such a condition results in built-in inflation.
When the Reserve Bank of India announces an increase in the Cash Reserve Ratio (CRR)? What does it mean?
Report Question
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The commercial banks will have less money to lend
0%
The Reserve Bank of India will have less money to lend
0%
The Union Government will have less money to lend
0%
None of the above
Explanation
CRR refers to the percentage of deposits banks have to keep as reserve (in cash). This reserve sum is not available for banks for lending and thus if the CRR increases, banks will have less money to lend.
Consider the following statements:
The National Housing Bank , the apex institution of housing finance in India, was set up as a wholly owned subsidiary of the RBI.
The Small Industries Development Bank of India was established as a wholly-owned subsidiary of the Industrial Development Bank of India.
Which of the statement given above is/are correct?
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Only 1
0%
Only 2
0%
Both 1 and 2
0%
Neither 1 nor 2
Explanation
National Housing Bank was set up as a wholly owned subsidiary of RBI in 1988 under the National Housing Bank Act 1987. It is the apex institution in India for housing.
The Small Industries Development Bank of India was established in 1990 as a wholly owned subsidiary of the Industrial Development Bank of India with the aim to aid in the growth and development of micro, small and medium-scale enterprises (MSME). Currently, the ownership is held by 34 Government of India owned/controlled institutions.
Which one of the following is the composition of Liquidity aggregate--2 (L2) other than Liquidity aggregate - 1 (L1) in the Indian Monetary System ?
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0%
Term deposits with Term Lending Institutions and Refinancing Institiutions
0%
Term Borrowing by Refinancing Institutions
0%
Certificates of Deposit issued by Refinancing Institutions
0%
All of the above
As per the recent report published in newspapers/magazines, India ranks at a l-power level in Hunger Index. The Hunger Index is measured on which of the following indicators?
Number of people who are calories- deficient
Child malnutrition
Rate of child mortality
Which of the statements given above is/are correct?
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0%
1 and 2
0%
1 and 3
0%
Only 2
0%
All of the above
Government of India, for the first time, nationalised 14 large commercial banks in the year _______.
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0%
1956
0%
1959
0%
1969
0%
1963
Explanation
The 14 largest commercial banks in India were nationalised in July 1969. These 14 banks together had 85% of the country's deposits. The move was aimed at extending credit facilities to all sections of the economy and promote financial inclusion.
Which one of the following is the basic objective for the setting up of Regional Rural Banks (RRBs) in India?
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Development of more diverse banking systems in Indian money market
0%
Diversification of scheduled commercial banking systems in India to tap the deposits potential of rural areas
0%
Development of rural areas by providing credit to agriculture, trade, commerce and other productive activities in rural areas
0%
Both 'a' and 'b'
Explanation
Regional Rural Banks (RRBs) were established on the recommendations of the Narsimham Committee in 1975. The basic objective was to further the goal of financial inclusion and extend credit and other banking facilities to rural areas so as to ensure overall rural development.
Which one of the following is correctly matched?
Bank Headquarters
1 . Federal Bank : Kerala
2 . Dhanlaxmi Bank Limited : Maharashtra
3 . Industrial Bank Limited : Delhi
Select the correct answer using the codes given below.
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0%
1 and 2
0%
Only 2
0%
2 and 3
0%
Only 1
Explanation
Both the Federal Bank and Dhanlaxmi Bank are headquartered in Kerala, in Aluva (Kochi) and Thrissur respectively. IDBI is a government-owned bank and is headquartered in Mumbai, Maharashtra.
Consider the following the statements:
The price of any currency in international market is decided by the
1) World Bank.
2) demand for goods/services provided by the country concerned.
3) stability of the government of the concerned country.
4) economic potential of the country in question.
Which of the statement(s) given above is/are correct?
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0%
1, 2, 3 and 4
0%
2 and 3
0%
3 and 4
0%
1 and 4
Explanation
The price of any currency is international market is determined by the forces of demand and supply. Demand for a currency increases if the demand for the goods and services provided by that country increases. Moreover, a stable Govt gives confidence to investors and raises the demand for currency of that country.
Which one of the following is emerged as a major instrument of Monetary Policy in the Indian economy?
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Liquidity Adjustment Facility
0%
Commercial Papers
0%
Treasury Bills
0%
None of the above
Explanation
Liquidity Adjustment Facility (LAF) is a tool used by the RBI to manage short term liquidity or money supply in the market. LAF helps banks to quickly borrow money in case of emergency or for adjusting in their SLR/CRR requirements.
With reference to Okun's law, consider the following statements
A one point increase in the unemployment rate is associated with two percentage points of negative growth in real GDP.
High employment in an economy leads to losses in a country's production.
Which of the statements given above is/are correct?
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Only 1
0%
Only 2
0%
Both 1 and 2
0%
Neither 1 nor 2
What will be the nature of the Beveridge curve when there is prevalent of the long term unemployment due to deterioration of human capital or a negative perception of the unemployed by the potential employers in an economy?
Report Question
0%
The curve will be shifted towards the origin.
0%
The curve will become negative.
0%
The curve will be shifted away from the origin.
0%
None of the above
Consider the following statements with regard to SLR:
1) To meet SLR, commercial banks can use cash only.
2) SLR is maintained by the banks with themselves.
3) SLR restricts the banks leverage in pumping more money into the economy.
Which of the statement(s) given above is/are correct?
Report Question
0%
1 and 2
0%
1 and 3
0%
2 and 3
0%
Only 2
Explanation
Statutory Liquidity Ratio (SLR) refers to the percentage of money which the banks have to set aside and invest in gold or RBI approved securities. It is maintained by the banks with themselves and restricts the banks' leverage in pumping more money into the economy.
Which of the following factors of an economy is/are related with Stagflation?
Low unemployment rate
High unemployment rate
High inflation rate
Low inflation rate
Select the correct answers using the codes given below?
Report Question
0%
1 and 3
0%
1 and 4
0%
2 and 3
0%
2 and 4
Which one among the following is the precious metal (Gold) or other approved securities that a commercial bank must maintain as reserves other than the cash with RBI?
Report Question
0%
Cash Reserve Requirement
0%
Statutory Liquidity Requirement
0%
Forward Fund
0%
Reserve Money
Explanation
Statutory Liquidity Ratio (SLR) refers to the percentage of money which the banks have to set aside and invest in gold or RBI approved securities. It is maintained by the banks with themselves and restricts the banks' leverage in pumping more money into the economy.
Which one of the following sub-sector of the services sector in India has contributed the highest per cent in the annual growth rate of the GDP?
Report Question
0%
Real estate, ownership of dwellings and business services
0%
Community, social, and personal services
0%
Transport, storage, and communication
0%
Trade, hotels, and restaurants
Explanation
Real estate, ownership of dwellings and business services are the biggest contributor to growth among the various sub-sectors in the services sector. It formed approximately 14.9% of the share of GDP in 2014-15. It is followed by t
rade, hotels and restaurants at 11.8%.
Consider the following statements
Under the Differential Rate of Interest Scheme, the public sector banks are required to lend at least one per cent of the total advances as at the end of the preceding year to the weakest of the weak sections of the society.
Under the Differential Rate of Interest (DRI) Scheme, the interest rate of advances made to the weakest of the weak sections of the society 4% per annum.
Which of the statements given above is/are correct?
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Only 1
0%
Only 2
0%
Both 1 and 2
0%
Neither 1 nor 2
Consider the following factors regarding the Structural Unemployment of an economy
Mechanisation of agriculture
Geographical factors or locations
Adoption of robotic technologies to replace unskilled labourers
Which of the factors given above are correct?
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0%
1 and 2
0%
1 and 3
0%
2 and 3
0%
All of these
Which one of the following countries has the highest percentage share of services sector in the country's GDP?
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0%
China
0%
Japan
0%
Brazil
0%
India
Explanation
Among the countries mentioned, services sector forms the greatest contributor to GDP in Japan where about 71.4% of the contribution is made by services. Among countries across the globe, France takes the lead with 79.8% contribution by the services sector.
The Reserve Bank of India regulates the commercial banks in matters of:
1) liquidity of assets
2) branch expansion
3) merger of banks
4) winding-up of banks
Select the correct answer using the codes given below.
Report Question
0%
1 and 4
0%
2, 3 and 4
0%
1, 2 and 3
0%
1, 2, 3 and 4
Explanation
RBI is called the banker's bank and regulates the banking sector in India. By using mechanisms like CRR, SLR etc, it keeps a check on liquidity of assets of the banks. Moreover, RBI also sets rules and regulations concerning merger of banks, their winding-up operations and branch expansion.
Which one of the following unemployments is also known as search unemployment which occurs at the time period between jobs when a worker is searching for or transitioning from one job to another?
Report Question
0%
Seasonal unemployment
0%
Frictional unemployment
0%
Classical unemployment
0%
None of the above
Which one of the following services is included in the services sector of Indian Economy?
Report Question
0%
Transport, storage and communication
0%
Financing, insurance, real estate, and business services
0%
Community, social and personal services
0%
All of the above
Explanation
Service sector is the tertiary sector of Indian economy and forms the largest contributor to GDP. Tourism, health care, education, transportation, communication, engineering, information technology, finance, banking, management and other such services form part of the services sector in India.
Which one of the following laws/curves stated that the lower the unemployment in an economy, the higher the rate of inflation?
Report Question
0%
Gini's Curve
0%
Verdoorn's law
0%
Gibrats law
0%
Phillips curve
Explanation
Philips curve is a historical inverse relationship between the rate of unemployment and the rate of inflation in an economy. Philip's curve stated that the lower the unemployment in an economy, the higher the rate of inflation.
Consider the following statements
International Development Association (IDA) is a member of the World Bank Group
IDA complements the International Bank for Reconstruction and Development by lending to development by leading to developing countries which suffer from the lowest gross national income, from troubled credit-worthiness, or from the lowest per capita income
International Development Association and International Banks for Reconstruction and Development are collectively known as the World Bank
Which of the statements given above are correct?
Report Question
0%
1 and 2
0%
1 and 3
0%
2 and 3
0%
All of these
Consider the following sectors of the Indian economy with respect to share of employment:
$$1.$$ Agricultural Sector
$$2.$$ Industrial Sector
$$3.$$ Service Sector
Arrange these sectors from the highest to lowest in the term of share of employment and select the correct answer using the codes given below.
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0%
$$1, 2, 3$$
0%
$$1, 3, 2$$
0%
$$3, 1, 2$$
0%
$$3, 2, 1$$
Explanation
Primary sector (agriculture and allied services) of the Indian economy provides employment to around 60% of the population while secondary or the industrial sector
provides employment
to 16% of the population. Tertiary or the services sector provides employment to about 24% of the population in India.
Which one of the following is the act of stimulating the economy by increasing the money supply or by reducing taxes?
Report Question
0%
Disinflation
0%
Reflation
0%
Inertial
Inflation
0%
Inflation hedge
Which one of the following services of the Services sector in the Indian Economy contributed the highest percentage in the Gross Domestic Product at the Factor Cost in the last ten years?
Report Question
0%
Hotels and restaurants
0%
Railways transport
0%
Banking and insurance
0%
Trade
Which one of the following services of the Indian Economy has the highest percentage of share in the services sector export?
Report Question
0%
Computer software
0%
Financial and non-financial
0%
Computer hardware
0%
Legal consultancy
Explanation
Computer software services form 46.4% (as of 2014-15) of the exports in the services sector and is the biggest constituent of the service sector exports. Exports in the services sector totalled at $76.59 billion in 2014-15.
Consider the following statements:
1) Reserve Bank of India was nationalised in the year 1955.
2) Reserve Bank of India is a member bank of the Asian Clearing Union.
Which of the statement(s) given above is/are correct?
Report Question
0%
Only 1
0%
Only 2
0%
Both 1 and 2
0%
Neither 1 nor 2
Explanation
RBI was nationalised as per RBI Act, 1948 with effect from 1st January, 1949.
Asian Clearing Union is an organisation set up to provide a system for clearing payments among the member countries on a multilateral basis. India, Iran, Pakistan, Bhutan, Bangladesh, Maldives, Myanmar, Nepal, Sri Lanka are its members.
Supply of money remaining the same when there is an increase in demand for money, there will be _____________.
Report Question
0%
a fall in the level of prices
0%
an increase in the rate of the interest
0%
a decrease in the rate of interest
0%
an increase in the level of income and employment
Explanation
Supply remaining the same, increase in demand for money will lead to more options to lend money for the banks. Thus, banks will lend money at greater rate of interest to earn more money as there are more customers for the same amount of money.
What is the contribution of service sector to employment generation in India?
Report Question
0%
$$40$$%
0%
$$56$$%
0%
$$15$$%
0%
$$23$$%
Explanation
Services sector provides employment to approximately 23% of the population. Largest employment provider is the agriculture sector, it provides employment to around 60% of the population. 16% of the employment is provided by the industrial sector.
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