Foreign Exchange

Q.

Explain how import substitution can protect domestic industry.

Q.

What were the two broad objectives of the policy of import substitution in India?

Q. The basic economic problems are solved in the public sector of a mixed economy through decision making by the planning authority.

1. True
2. False

Q.

What is meant by foreign exchange reserve?

Q.

CAD (current account deficit) can be managed through import substitution. Do you agree?

Q. The New Economic Policy was introduced in India in _____________.

1. $1998$
2. $1991$
3. $1997$
4. None of these

Q. Short answer type questions:
Reduction in income inequalities raises welfare of the people. How can government help through government budget, in this regard? Explain.

Q. Which five year plan saw establishment of steel plants at Durgapur, Bhilai and Rourkela?

1. First Five year plan
2. Third Five year plan
3. Fourth Five year plan
4. Second Five year plan

Q. As we read every now and then, the Monetary and Credit Policy is reviewed and changes/corrections are made frequently. Who amongst the following exactly takes this decision in India?

1. Deputy Chairman, Planning Commission
2. Prime Minister
3. Finance Minister
4. Reserve Bank of India

Q. Match the following concepts to their terminologies:

1. Protectionism
2. Import Substitution
3. Foreign Exchange
4. FERA

Q.

Reserves of foreign currency that are held by the central bank of an economy are called ___ reserves.

Q. Very Short Answer Type Questions
What is meant by foreign exchange rate?

Q. Explain the role of government budget in fighting inflationary and deflationary tendencies.

Q. What is meant by trade deficit?

Q. Capital formation in underdeveloped countries is a major bottleneck. The reason can be _____.

1. Small size of market with no incentive for investment
2. Low level of income
3. Demonstration effect
4. All the above

Q. Special Drawing Rights are the rights of countries provided by

1. World Bank
2. IMF
3. ADB
4. Federal Reserve

Q. Which of the following Committee was set up for Foreign Direct Investment?

1. Deepak Parekh Committee
2. Mayaram Committee
3. Rajaman Committee
4. DR R Cheliaha Committee

Q. Which of the following establishes the fact that India has adopted the policy of liberalisation?

1. Poverty alleviation programmes were launched.
2. Beginning of five-year planning.
3. Restriction on import of most of the goods is removed.
4. Announcement of support price for agricultural products.

Q. Internal economies accrue when _________.

1. an industry develops
2. an economy grows
3. a firm expands
4. foreign Trade Develops

Q.

If FOREX reserves are rising, which of the following could be the causes?

1. Increase in imports

2. Falling BOP

3. Rising BOP

4. Increase in exports

Q.

Which is the central monetary authority of India?

1. Reserve Bank of India

2. State Bank of India

3. Securities and Exchange Board of India

4. Life Insurance Corporation

Q. Which of the following would not cause an economy's production possibilities curve to shift to the right?

1. The discovery of new superconductivity materials which makes manufacturing more efficient.
2. Improvements in technology.
3. A decrease in unemployment.
4. Widespread application of irrigation to agricultural land.

Q. Which of the following were abolished as part of the External Sector Reforms in 1991?

1. Cash Compensatory Scheme
2. Neither (a) nor (b)
3. Both (a) and (b)
4. EXIM Scrip Scheme

Q. The institution which controls purchases and sales of foreign exchange of India is _____.

1. The Reserve Bank of India
2. The Finance Ministry of India
3. None of the above
4. International Monetary Fund

Q.

As a result of the foreign trade reforms ________.

1. EPCG scheme has been abolished.
2. the number of import licenses has increased.
3. the average tariff rates have been reduced.
4. only a few types of goods and services can now be exchanged freely.

Q. Economic reform is required to overcome the problem of:
(i) Excess consumption and expenditure over revenue
(ii) Over protection to industry and heavy losses in public sector
(iii) Mismanagement of firm, economy and poor technological development
(iv) Mismanagement of foreign exchange reserve and shortage of foreign exchange

1. (i) and (ii)
2. (i) and (iii)
3. (i) (ii) and (iii)
4. All of the above

Q. The term underdevelopment implies __________.

1. social institutions are very backward
2. low per capita real income
3. high level of economic and technological backwardness
4. high population growth

Q. When was the NEP introduced?

1. 1980
2. 1991
3. 1990
4. 1986