The 'automatic route' for FDI means: MCQ with Answer and Explanation

Question

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The 'automatic route' for FDI means:

A. only foreign individuals can invest

B. prior approval is required

C. only government companies can invest

D. no prior approval is required

Answer: Option D

Solution (By JKSSB Mock Tests)

Under the automatic route, FDI does not require prior government approval.

This question belongs to: Economy GK Economy Set 1

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Question #1

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Which of the following is a component of revenue expenditure of the government?

A. Expenditure on construction of roads

B. Interest payments

C. Loans to state governments

D. Expenditure on acquisition of land

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Correct Answer: Option B

Explanation:
Revenue expenditure does not create assets or reduce liabilities. Interest payments are a major component of revenue expenditure. Acquisition of land, loans and construction create assets and are capital expenditure.

This question belongs to: Economy GK Economy Set 1

Question #2

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The concept of 'Tobin's q' is defined as:

A. The ratio of money supply to GDP

B. The ratio of consumption to income

C. The ratio of investment to saving

D. The ratio of the market value of installed capital to its replacement cost

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Correct Answer: Option D

Explanation:
Tobin's q is the ratio of the market value of a firm's capital to the replacement cost of that capital. Investment is encouraged when q > 1 and discouraged when q < 1.

This question belongs to: Economy GK Economy Set 1