Globalization in the Indian economic context means: MCQ with Answer and Explanation

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Globalization in the Indian economic context means:

A. closing the economy to foreign trade

B. increasing integration with the world economy

C. self-reliant village economy

D. nationalization of foreign companies

Answer: Option B

Solution (By JKSSB Mock Tests)

Globalization means increasing integration of the Indian economy with the world economy.

This question belongs to: Economy GK Economy Set 1

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Question #1

The Marshall-Lerner condition states that devaluation improves the trade balance if:

A. import tariffs are raised

B. exports exceed imports

C. the sum is less than one

D. the sum of price elasticities of demand for exports and imports is greater than one

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Correct Answer: Option D

Explanation:
The Marshall-Lerner condition requires the sum of export and import demand elasticities to exceed one.

This question belongs to: Economy GK Economy Set 1

Question #2

Which of the following is a major objective of monetary policy in India?

A. Maintaining price stability while keeping in mind the objective of growth

B. Promoting only imports

C. Maximising inflation

D. Maximising the fiscal deficit

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Correct Answer: Option A

Explanation:
Under the Monetary Policy Framework Agreement, the primary objective of the RBI is to maintain price stability while keeping in mind the objective of growth.

This question belongs to: Economy GK Economy Set 1

Question #3

Which of the following is a feature of the 'Ricardian Equivalence Theorem'?

A. Tax cuts financed by debt do not affect private consumption because agents anticipate future tax liabilities

B. Only liquidity-constrained agents matter

C. Government debt is always neutral regardless of agents’ behaviour

D. Tax cuts financed by debt increase private consumption

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Correct Answer: Option A

Explanation:
Ricardian equivalence asserts that, under certain conditions, debt-financed tax cuts do not stimulate consumption because forward-looking agents save the tax cut to pay the future taxes needed to service the debt.

This question belongs to: Economy GK Economy Set 1

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