Unit 1: An Overview of Indian Economy (JAIIB-Module A)
Unit 25 - Non Banking Financial Companies
1. Which of the following best describes the nature of the Indian economy?
A. Fully developed capitalist economy
B. Pure socialist economy
C. Mixed economy with features of both capitalism and socialism
D. Traditional subsistence economy
India is a mixed economy combining both public sector control (socialist features) and private enterprise (capitalist features).
2. When did India adopt a planned economic development approach?
A. 1947
B. 1951
C. 1960
D. 1975
The first Five-Year Plan of India started in 1951, marking the beginning of planned economic development.
3. Which of the following is a primary characteristic of the Indian economy?
A. Large population and labor force
B. Complete industrialization
C. Low reliance on agriculture
D. Homogeneous social structure
India has a large population and labor force, which is a key characteristic of its economic structure.
4. What was the focus of the Indian economy immediately after independence?
A. Export-led industrialization
B. Privatization of industries
C. Financial liberalization
D. Agricultural development and self-sufficiency
Early post-independence plans emphasized agriculture and achieving food self-sufficiency.
5. Which of the following best describes the sectoral composition of the Indian economy?
A. Dominated entirely by industrial sector
B. Combination of agriculture, industry, and services
C. Entirely service-oriented
D. Primarily import-dependent
The Indian economy is mixed and includes agriculture, industry, and service sectors.
6. Which feature of the Indian economy highlights its reliance on traditional practices and low technology adoption in some sectors?
A. Service sector dominance
B. High per capita income
C. Predominantly agrarian and labor-intensive activities
D. Complete mechanization
Many sectors, especially agriculture and small-scale industries, still rely on traditional methods and manual labor.
7. The Indian economy is considered a 'developing economy' because:
A. It has moderate per capita income and improving industrialization
B. It is fully industrialized with high per capita income
C. It has no reliance on agriculture
D. It has zero population growth
India is developing as it has a growing industrial sector, moderate per capita income, and ongoing improvements in infrastructure and social indicators.
8. Which of the following statements best describes the Indian economy during the pre-British period?
A. Fully industrialized with modern technology
B. Predominantly agrarian with small-scale handicrafts
C. Completely dependent on foreign imports
D. Service sector dominated the economy
Before British rule, the Indian economy was largely agrarian with widespread handicrafts and cottage industries.
9. Which sector was the main source of livelihood for the majority of people in pre-British India?
A. Mining and manufacturing
B. Trade and commerce
C. Agriculture
D. Service sector
The majority of the population depended on agriculture for their livelihood in the pre-British period.
10. Which of the following was a notable feature of pre-British Indian handicrafts?
A. Mass production using machines
B. Export-oriented industrialization
C. Dominance of foreign-owned factories
D. Small-scale, labor-intensive, and high-quality production
Pre-British India was famous for small-scale, labor-intensive handicrafts that were often high in quality.
11. Which of the following was a characteristic of trade in pre-British India?
A. Thriving internal trade and overseas trade with Asia and Europe
B. Completely closed economy with no exports
C. Entirely dependent on British merchants
D. Dominated by modern corporations
India had active internal trade and exported goods like textiles, spices, and handicrafts to Asia and Europe.
12. Which currency system was widely used in pre-British India?
A. Paper currency issued by RBI
B. Only barter system
C. Coin-based metallic currency like silver and gold coins
D. Digital currency
The economy largely used metallic coins, mainly silver and gold, for trade before British monetary reforms.
13. Which statement is correct about land revenue system in pre-British India?
A. Land revenue was negligible and informal
B. Land revenue was collected by local rulers and zamindars
C. British collected land revenue directly in all regions
D. No taxation system existed
Local rulers and zamindars were responsible for collecting land revenue from farmers before the British introduced centralized systems.
14. What was the average GDP growth rate of India during the high growth period before 2008?
A. 4-5%
B. 5-6%
C. 6-7%
D. 8-9%
Before the global financial crisis in 2008, India experienced high GDP growth averaging around 8-9% annually, driven by IT, services, and industrial growth.
15. Which event triggered a slowdown in the Indian economy after 2008?
A. Dot-com bubble burst
B. Global financial crisis
C. Introduction of GST
D. Demonetization
The global financial crisis of 2008 led to a slowdown in India’s economic growth due to reduced exports, investment, and liquidity crunch.
16. Which of the following sectors helped India sustain growth after 2008?
A. Heavy manufacturing only
B. Agriculture only
C. IT, services, and domestic consumption
D. Mining and coal industries only
After 2008, India’s IT, service sector, and domestic consumption helped mitigate the impact of the global slowdown.
17. What is the approximate per capita income of India as of 2010 in USD?
A. 1,200 USD
B. 2,500 USD
C. 5,000 USD
D. 10,000 USD
Around 2010, India’s per capita income was roughly 1,200 USD, reflecting moderate income levels despite rapid GDP growth.
18. Which economic reforms helped India maintain stability after the 2008 crisis?
A. Nationalization of banks
B. Fiscal stimulus, monetary easing, and reform in financial sector
C. Import substitution only
D. Gold standard adoption
Post-2008, India used fiscal stimulus packages, monetary easing by RBI, and financial sector reforms to sustain growth.
19. Which indicator measures the impact of the 2008 global crisis on India’s banking sector?
A. Trade deficit only
B. Inflation rate only
C. Non-Performing Assets (NPA) increase and liquidity crunch
D. Gold imports only
The banking sector faced increased NPAs and liquidity issues due to slowdown in industrial and export activity.
20. Which of the following best describes India’s post-2008 economic trajectory?
A. Complete stagnation with no growth
B. Decline in all sectors permanently
C. Reliance solely on foreign investment
D. Moderate growth with structural reforms and domestic consumption support
India maintained moderate growth after 2008, supported by domestic consumption, fiscal and monetary reforms, and structural adjustments.
21. Which of the following best describes the term 'structural changes' in the Indian economy?
A. Short-term fluctuations in GDP
B. Only changes in inflation rates
C. Long-term shifts in sectoral composition and economic activities
D. Seasonal changes in agriculture
Structural changes refer to long-term shifts in the economy, such as movement from agriculture to industry and services, and changes in employment patterns.
22. Which sector’s share in India’s GDP has increased significantly since the 1990s?
A. Agriculture
B. Services
C. Mining
D. Manufacturing
The services sector, including IT, banking, and telecom, has seen a substantial increase in its contribution to India’s GDP since economic liberalization in the 1990s.
23. Which structural change is associated with rural to urban migration in India?
A. Shift of labor from agriculture to industry and services
B. Increase in agricultural productivity only
C. Decline of financial institutions
D. Higher import dependence
Rural to urban migration reflects a structural shift of labor from agriculture to industry and services in search of better employment opportunities.
24. What has been the trend in the share of agriculture in India’s GDP over the last few decades?
A. Steadily increasing
B. Fluctuating randomly
C. Increasing in absolute and relative terms
D. Gradually declining in relative terms
While agriculture output has increased in absolute terms, its share in GDP has declined due to faster growth in industry and services sectors.
25. Which of the following is a consequence of structural changes in the Indian economy?
A. Reduced urbanization
B. Change in employment patterns and skill requirements
C. Decline in service sector
D. Increased reliance solely on agriculture
Structural changes lead to shifts in employment from agriculture to industry/services and require new skills and education.
26. Which of the following policy changes contributed significantly to structural transformation in India after 1991?
A. Nationalization of banks
B. Green Revolution only
C. Liberalization, privatization, and globalization (LPG reforms)
D. Barter trade system
The LPG reforms of 1991 opened the economy to private and foreign investment, contributing to rapid structural changes.
27. Which sector’s share in employment has not grown in proportion to its share in GDP?
A. Agriculture
B. Services
C. Mining
D. Manufacturing
The services sector contributes a large share of GDP, but employment generation in services is lower compared to agriculture.
28. Which of the following best exemplifies structural transformation in India?
A. Decline in exports
B. Reduced urban population
C. Decline of services sector
D. Shift of economic activity from agriculture to industry and services
Structural transformation is marked by the shift of resources, investment, and labor from agriculture to higher-productivity industry and services.
