Economic Concepts and Indian Economy MCQ — 20 Practice Questions with Answers

Explanation

Capital expenditure is spending that results in creation of physical or financial assets, such as land, buildings, machinery, equipment or investments. Routine operating expenses are normally treated as revenue expenditure.

Explanation

Inflation is a sustained rise in the general price level, which lowers purchasing power when incomes do not keep pace. RBI's flexible inflation-targeting framework uses monetary policy instruments to guide inflation while considering growth.

Explanation

IBC is a structural reform because it changes the rules for handling debt default and distressed firms. The official reform logic was that scattered and slow legal mechanisms had weakened recovery and restructuring. A time-bound insolvency framework improves creditor discipline, gives viable firms a chance of resolution as going concerns, and reallocates labour and capital toward more productive uses.

Explanation

The important distinction is that India did not simply rename the Planning Commission and continue old-style plan allocation. NITI Aayog was constituted on 1 January 2015 as the replacement institution, with an advisory and cooperative-federalism role. The ongoing Twelfth Five Year Plan, covering 2012-17, continued up to 31 March 2017, after which the Five Year Plan format gave way to broader vision, strategy and action-agenda documents.

Explanation

Fiscal deficit is calculated as total expenditure minus revenue receipts and non-debt creating capital receipts. In practical terms, it indicates how much the government has to borrow to finance its expenditure gap.