External commercial borrowing refers to: MCQ with Answer and Explanation

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External commercial borrowing refers to:

A. foreign direct investment

B. borrowing by Indian firms from foreign lenders

C. borrowing from domestic banks

D. borrowing by the government from the RBI

Answer: Option B

Solution (By JKSSB Mock Tests)

External commercial borrowing is commercial loans raised by Indian firms from foreign lenders.

This question belongs to: Economy GK Economy Set 1

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Question #1

In accounting terms, the overall Balance of Payments always balances because:

A. current account equals capital account

B. exchange rates are fixed

C. exports always equal imports

D. it follows double-entry bookkeeping and official reserves adjust

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Correct Answer: Option D

Explanation:
The Balance of Payments always balances in accounting terms due to double-entry bookkeeping and reserve movements.

This question belongs to: Economy GK Economy Set 1

Question #2

Which of the following is NOT included in the calculation of GDP at market prices?

A. Private consumption expenditure

B. Net exports

C. Gross investment

D. Intermediate goods

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Correct Answer: Option D

Explanation:
GDP includes only final goods and services to avoid double counting. Intermediate goods are not included in GDP calculation.

This question belongs to: Economy GK Economy Set 1

Question #3

The Laffer Curve illustrates the relationship between:

A. Interest rates and investment

B. Inflation and unemployment

C. Tax rates and tax revenue

D. Money supply and inflation

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Correct Answer: Option C

Explanation:
The Laffer Curve shows that beyond a certain point, increasing tax rates may lead to a decrease in total tax revenue due to reduced economic activity and tax evasion.

This question belongs to: Economy GK Economy Set 1

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