MCQs on Liberalisation, Globalisation and Privatisation

Liberalisation, Globalisation and Privatisation was a part of the new economic reforms that were introduced by the Indian Government in 1991. These reforms were mainly aimed at opening up the economy and bringing economic reforms to the country. It helped to remove some of the restrictions that had become a hindrance to the economic development of the country. It also helped the private sector expand in the country and contribute to economic growth.

We have collated a list of multiple-choice questions on Liberalisation, Globalisation and Privatisation to help students get a firm grip on the important concepts related to this topic.

1. Which of the following was the main reason behind initiating the economic reforms in the country?
   1. India was facing a huge fiscal deficit issue
   2. India had an adverse balance of payments
   3. The rise in the prices of several essential commodities
   4. All of the above

Answer: d

2. Which of the following was one of the most important measures introduced in the foreign trade policy from 1991?
   1. The reduction of restrictions on imports from other countries
   2. The reduction of restrictions on exports to other countries
   3. Both a and b are incorrect
   4. Both a and b are correct

Answer: d

3. Which of the following is the main advantage of the inward foreign direct investments in India?
   1. The inward foreign direct investment helps to bring foreign exchange into the country
   2. The inward foreign direct investment helps to bring modern technology into the country
   3. The inward foreign direct investment helps to bring management expertise into the country
   4. All of the above

Answer: d

4. Which of the following statements about the fiscal deficit is correct?
   1. It is a part of the total government expenditure that is met by imposing more taxes
   2. It is a part of the total government expenditure that is met through borrowings
   3. It is a part of the total government expenditure that is met by selling the shares held by them in public companies
   4. It is a part of the total government expenditure that is met by imposing public assets

Answer: b

5. Which of the following statements about the new economic policy is not correct?
   1. The new economic policy helped to initiate privatisation in the country
   2. The new economic policy helped to initiate liberalisation in the country
   3. The new economic policy helped to initiate urbanisation in the country
   4. The new economic policy helped to initiate globalisation in the country

Answer: c

6. Which of the following statements correctly describes the process of initiating foreign exchange reforms?
   1. The rupee is devalued against the foreign currency
   2. The government decided to introduce the fixed exchange rate system
   3. The exchange rate is determined by the market forces
   4. Both a and c are correct

Answer: a

7. Which of the following statements correctly describes the process of privatisation?
   1. The privatisation process involves transferring a company to a non-profit organisation
   2. The privatisation process involves outsourcing services to other companies
   3. The privatisation process involves selling off a few public sector units to the private sector
   4. None of the above

Answer: c

8. Which of the following statements is true about the import licensing reforms under the new economic policy of 1991?
   1. The import licensing was abolished except in the case of hazardous items
   2. The import licensing was abolished except in the case of environmentally sensitive industries
   3. Both a and b are incorrect
   4. Both a and b are incorrect

Answer: d

9. Which of the following statements accurately describes the industrial policy of India before the Liberalisation, Globalisation and Privatisation reforms?
   1. The industrial policy before 1991 was a pro-public sector reform
   2. The industrial policy before 1991 was a pro-private sector reform
   3. The industrial policy before 1991 was an anti-public sector reform
   4. The industrial policy before 1991 was an anti-private sector reform

Answer: a

10. Which of the following statements is true about the Indian financial crisis before 1991?
    1. The World Bank and International Monetary Fund (IMF) provided 10 billion dollars to bail India out of the financial crisis
    2. The World Bank and International Monetary Fund (IMF) provided 7 billion dollars to bail India out of the financial crisis
    3. The World Bank and International Monetary Fund (IMF) provided 15 billion dollars to bail India out of the financial crisis
    4. The World Bank and International Monetary Fund (IMF) provided 12 billion dollars to bail India out of the financial crisis

Answer: b

11. Which of the following statements is true about liberalisation?
    1. It involves the reduction of government controls and deregulation along with greater autonomy for the private investments
    2. It refers to contracting some of the activities performed within the organisation to third parties
    3. Both a and b are correct
    4. Both a and b are incorrect

Answer: c

12. Which of these economic reforms were initiated by the government under their liberalisation policy?
    1. Industrial and financial sector reforms
    2. Industrial, agricultural and financial sector reforms
    3. Agricultural and financial sector reforms
    4. Industrial and agricultural sector reforms

Answer: a

13. Which of the following bodies was a predecessor to the World Trade Organisation (WTO)?
    1. General Agreement on Tariffs and Trade (GATT)
    2. International Monetary Fund (IMF)
    3. International Bank for Reconstruction and Development (IBRD)
    4. None of the above

Answer: a

14. Which one of the following is not a feature of privatisation?
    1. Implementing the policy of disinvestment of public sector units
    2. Contraction of the public sector
    3. Reduction of the tax rates
    4. Both a and b are correct

Answer: c

15. Which of the following statements is true about financial sector reforms?
    1. Financial sector reforms mainly relate to the banking sector
    2. Financial sector reforms mainly relate to the foreign exchange markets
    3. Both a and b are correct
    4. Both a and b are incorrect

Answer: c

Also See:

• Mcq on Central Problems of an Economy
• Meaning of Economic and Non-Economic Activities
• Mcqs on Economic Growth and Development
• Mcqs on Economic Reforms in India
• Government Budget Meaning and Its Components