146: There has been a persistent deficit budget year after year. Which of the following actions can be taken by the government to reduce the deficit?
1. Reducing revenue expenditure
2. Introducing new welfare schemes
3. Rationalizing subsidies
4. Expanding industries
Select the correct answer using the code given below.
(a) 1 and 3 only
(b) 2 and 3 only
(c) 1 only
(d) 1, 2, 3 and 4
Explanation:
Rationalizing subsidies and reducing revenue expenditure are two direct ways of reducing the fiscal burden of the government of India.
Introducing new welfare scheme and expanding industries will increase the budget deficit. But in the long run Expanding industries will help in reducing the deficit.
147: Economic growth is with usually coupled with
(a) Deflation
(b) Inflation
(c) Hyperinflation
(d) Stagflation
Explanation:
Economic growth is an increase (or decrease) in the number of good and services that an economy produces over time. The connection between the level of production and the level of prices also holds for the rate of change of production (that is, the rate of economic growth) and the rate of change of prices (that is, the inflation rate).
148: The chemical name for urea is:
(a) Aneurin
(b) Chloroethene
(c) Carbamide
(d) None of these
149: The lowering of Bank Rate by the Reserve Bank of India leads to
(a) More liquidity in the market.
(b) Less liquidity in the market.
(c) No change in the liquidity in the market.
(d) Mobilization of more deposits by commercial banks.
Explanation:
The Central Bank of a country (RBI, in our case) has the responsibility to control the supply of money in the economy to keep a cheak on the inflation, sustain , sustain economic growth an achieve other economic objectives. Reserve Bank of India uses various monetary tools to achieve these objectives. Interest rates are one of the very prominent monetary tools used by RBI. An increase in the interest rate will lead the bank rate or discount rate to go up. Bank rate is the rate at which RBI lends to the commercial banks. Commercial banks decide their own lending rates based on this discount rate. As a result, liquidity is usually affected as lending capacity of banks decrease with increase in interest rates and supply of money in the economy is reduced.
When RBI increases interest rates it very often also sucks out excess liquidity in the system in a bid to cool inflation. High interest rates affect the lending capacity of the banks which sucks up the supply of money in the economy. This usually lowers the liquidity. Lower liquidity leads to lower speculation, lower consumption and lower investment. Consequently, stock prices come down.
150: Economic Survey in India is published officially, every year by the
(a) Reserve Bank of India
(b) Planning Commission of India
(c) Ministry of Finance, Government of India
(d) Ministry of Industries, Government of India
Explanation:
Economic Survey in India is published officially every year by Ministry of Finance, Government of India.