Economics Mock Test- 3 - Class 10 MCQ

 Consumer Forums are special courts for consumers who buy or avail services. Consumer forums works under/as per Consumer Protection Act 1986 (CPA 1986). Any customer who falls under definition of consumer under CPA 1986 can lodge his/her complaint in forums.

• Option C: Banks provide loans only to profit-making businesses.

• Bank Functions: Banks accept deposits from customers and pay an amount as interest on those deposits. They also provide various financial services to individuals and businesses.


• Security of Deposits: People's money is safe with banks as they are usually insured by government bodies like the FDIC (Federal Deposit Insurance Corporation) in the United States.


• Loan Eligibility: Banks provide loans not only to profit-making businesses but also to individuals, small businesses, and other entities based on their creditworthiness and ability to repay the loan.


• Access to Credit: It is easier for individuals with savings and current accounts in banks to get credit as they have an established relationship with the bank, making it easier for the bank to assess their creditworthiness.

ISO (International Organisation for Standardisation) is the organisation that sets standards of products at the international level.

• Both A and R are true: It is true that the credit activities of the informal sector should be discouraged, as they often involve high interest rates and lack of formal documentation. This can lead to exploitation of borrowers and financial instability.


• R is not the correct explanation of A: While it may be easier to get a loan from informal resources as compared to banks, the reason for discouraging informal credit activities is not solely based on the difficulty of obtaining a loan from a bank. The main concern is the potential negative consequences of relying on informal credit sources, such as financial vulnerability and lack of legal protection.

- Nationalisation of banks in India initiated in 1969 because of socialistic principles of government.

- Liberalisation, Privatisation and Globalisation (LPG) reforms started in  1991.

- Technology intrusion, Liberalisation of trade and emergence of World Trade Organisation were started after 1991 LPG reforms.

- These reforms opens the Indian market to foreign companies which results in people of India gets the cheapest goods, domestic companies faced the competition from Multi-national companies and service-led growth.

Greater integration of global commodities markets leads to constant fluctuation in prices. This has increased the vulnerability of Indian farmers. Farmers are also increasingly dependent on seeds and fertilizers sold by the MNCs.

• Close to the markets: Setting up production close to the markets helps in reducing transportation costs and lead times. It allows the company to quickly respond to changing consumer demands and preferences.


• Close to the sea: Proximity to the sea provides easy access to shipping routes for both importing raw materials and exporting finished products. It also helps in reducing transportation costs.


• Close to the airport: Being close to the airport facilitates quick transportation of goods, especially for products that are time-sensitive or have a short shelf life.


• Close to the villages: Setting up production close to villages can provide access to a skilled and cost-effective labor force. It can also help in building good relationships with the local community.

• An MNC should consider various factors such as market proximity, transportation infrastructure, labor availability, and cost when deciding where to set up production.


• Choosing a location close to the markets can help in reducing costs and improving operational efficiency.


• Proximity to sea or airports can facilitate smooth logistics operations and ensure timely delivery of goods.


• Setting up production close to villages can provide access to a skilled and cost-effective labor force, as well as help in fostering good relationships with the local community.

• Liberalisation and Globalisation: Liberalisation refers to the removal of barriers or restrictions set by the government on trade. This process allows for more free movement of goods and services across borders.


• Relationship between Liberalisation and Globalisation: Liberalisation plays a crucial role in the globalisation process by promoting international trade and investment. When barriers are removed, it allows for easier access to foreign markets and encourages competition.


• Impact of Liberalisation on Globalisation: Liberalisation leads to increased economic growth, efficiency, and innovation. It also helps in creating a more interconnected global economy.


• Explanation of Assertion and Reason: The assertion is true as liberalisation is indeed the removal of trade barriers by the government. The reason is also true as liberalisation does facilitate the globalisation process by promoting international trade and connectivity.


• Correct Answer Justification: Option A is the correct choice as both the assertion and reason are true, and the reason correctly explains why liberalisation helps in the globalisation process.

The Gini coefficient is a measure of income inequality within a country. A higher Gini coefficient indicates greater income inequality. It is calculated based on the distribution of income among the population, with 0 representing perfect equality and 1 indicating perfect inequality. The coefficient is an essential tool for understanding the economic disparities within a nation. The World Bank uses it to assess and compare the economic conditions of different countries.

The Human Development Index (HDI) is calculated by adding three main indicators: literacy rate, life expectancy at birth, and per capita income. These indicators provide a comprehensive measure of a country's overall development. The HDI is a useful tool for comparing the quality of life and development across different nations.

The secondary sector includes secondary processing of raw materials, foodmanufacturing, textile manufacturing and industry. Manufacturing and Industry sector known as the secondary sector, sometimes as the production sector, includes all branches of human activities that transform raw materials into productsor goods.

Primary sector is the largest employer in India.  It employes about 64% of the Indian population. 
This sector produces only a quarter of GDP because in it, the first step of goods production takes place. It is the supplier of raw material to the secondary sector. And the value of the good increases on each subsequent step and primary sector provides the first step. So, it's share is quite less in GDP. 

The primary sector includes the production of raw material and basic foods. Activities associated with the primary sector include agriculture (both subsistence and commercial), mining, forestry, farming, grazing, hunting and gathering, fishing, and quarrying.

• Definition: The organised sector refers to those enterprises where the terms of employment are regular. This means that employees have fixed working hours, job security, and other benefits like provident fund, gratuity, etc.


• Characteristics: In the organised sector, jobs are more stable and reliable compared to the unorganised sector. There is a clear structure and hierarchy in place, and employees are usually provided with training and skill development opportunities.


• Regulation: The organised sector is often regulated by the government in terms of labour laws, working conditions, minimum wages, etc. This ensures that workers are protected and their rights are upheld.


• Formal Economy: The organised sector is part of the formal economy, where transactions are recorded, and taxes are paid. This contributes to the overall economic growth of the country.

• Setting up new factories: This is a common route for MNCs to establish a physical presence in a new market. By setting up new factories, they can control the production process and tailor it to their specific needs.


• Buying existing local companies: Acquiring local companies can provide MNCs with an established customer base, distribution network, and brand presence in the market. It can also help them navigate local regulations and cultural nuances more effectively.


• Forming partnerships with local companies: Collaborating with local companies can help MNCs leverage their local knowledge, resources, and networks. This can be a cost-effective way to enter a new market and mitigate risks associated with unfamiliar environments.

Answer: The most common route for investments by MNCs in countries around the world is to buy existing local companies.

• It owns/controls production in more than one nation: Multinational companies have operations in multiple countries, allowing them to access different markets and resources.


• It sets up factories where it is close to the markets: Multinational companies strategically locate their production facilities near their target markets to reduce transportation costs and respond quickly to market demands.


• It organises production in complex ways: Multinational companies often have complex supply chains and production processes to optimize efficiency and reduce costs.

• It employs labour only from its own country: Multinational companies typically employ a diverse workforce from different countries to leverage different skills, knowledge, and perspectives. They do not restrict their labor force to only employees from their home country.

• To liberalise international trade: The main aim of forming the World Trade Organisation (WTO) was to liberalise international trade by promoting free trade and removing barriers such as tariffs and quotas.

The World Bank primarily uses per capita income as a criterion for classifying different countries. Per capita income is calculated by dividing the total national income by the population. It provides an indication of the average income per person in a country and is widely used for international comparisons of economic development.

Sustainable development aims to meet the needs of the present generation without compromising the ability of future generations to meet their own needs. It emphasizes responsible resource use, environmental conservation, and long-term planning to ensure a balanced and equitable development path.

Underemployment is a measure of employment and labor utilization in the economy that looks at how well the labor force is being utilized in terms of skills, experience and availability to work. Labor that falls under the underemployment classification includes those workers who are highly skilled but working in low paying or low skill jobs and part-time workers who would prefer to be full-time. This is different from unemployment in that the individual is working but is not working at his full capability.

Notified on September 7, 2005, MGNREGA aims at enhancing livelihood security by providing at least one hundred days of guaranteed wage employment in a financial year to every rural household whose adult members volunteer to do unskilled manual work.

The mode through which the borrower will repay the loan must be clearly mentioned. Interest rate, collateral and documentation requirement and the mode of repayment together comprise what is called the terms of credit.

A is the correct option.The formal sector still meets only about half(so 52%) of the total credit needs of the rural people. The remaining credit needs are met from informal sources.