Test: Indian Economy- 1 - Class 5 MCQ

This is the route for foreign investment in the India stock market by the Foreign Financial Investors (FFIs).

The Reserve Bank of India. was set up on the basis of he recommendations of the Hilton Young Commission. The Reserve Bank of India Act, 1934 (II of 1934) provides the statutory basis of the functioning of the Bank, which commenced operations on April 1, 1935. 

The composition of national income keeps changing with the growth in the economy. Initially, the economy relies heavily on primary sector to generate value. With growth, the secondary sector picks up and forms greater share of the national income, alongside the tertiary sector which starts making its mark. As development quickens, role of primary sector in the national income diminishes and the share of tertiary sector grows.

Growth in an economy as a result of the changing age structure of a country can be defined as demographic dividend. India has more than 60% of its population in the age-group of 15-64 years, which is capable of working and hence the highest potential to contribute to the need of labour and human capital. Higher demographic dividend also results in higher demand fuelled by greater savings and hence stimulates growth.

Good which can be used in place of another good with just the same function, is called perfect substitute for the other good. For such goods, if price of one good increases, the demand for its substitute increases. For example, if someone gets the same satisfaction and utility from tea or coffee and they can be interchanged for each other, the two are perfect substitutes.

While agriculture and allied services contribute close to 17% to the GDP, share of services sector is around 59% (in 2013) up from 30% in 1951-52. Contribution of agriculture has dropped from 51% in 1951-52 due to the rapid growth in services sector and reduced dependence of the country on agriculture for economic growth.

India's population as per Census 2011 was recorded at 1.21 billion against the total world population of approximately 7 billion.  It comprised around 624 million males and 586 million females. The country's population was equal to the combined population of Brazil, Bangladesh, USA, Pakistan, Japan and Indonesia.

Population of India in 1911 was 252.09 million and it dropped to 251.32 million in 1921, registering a decline of -0.31%. For this reason, 1921 has been termed by the Census Commissioner as the year of Great Divide. Growth has been positive for all other decades, it was moderate from 1921-1951 and then quickened post 1951.

Countries are initially characterized with high birth rate and high death rate as the there are not enough health facilities available, the population is unaware of the health and hygiene practices to be followed. As development happens, improvements in hygiene, sanitation, food availability reduces the death rate. This is the phase when population growth quickens. With further development, education and literacy, the population is apprised of family planning and contraception which checks the birth rate as well.

The Reserve Bank of India acts as a lender of last resort and a bankers' bank. It provides credit to banks in times of need and other banks retain their deposits with the RBI. Although RBI time and again gives its views on the health of the banking sector and takes measures to strengthen it, it does not really advise the commercial banks on monetary matters.