Important MCQ questions for Class 11 Economics Chapter-Liberalization, Privatization and Globalization: An Appraisal
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Economics - MCQ on Liberalization, Privatization and Globalization: An Appraisal
Class XI
Q 1. In 1991, the new economic policy was introduced
(a) becauseIndia became the member of WTO.
(b) to met with an economic crisis.
(c) to increase foreign exchange reserve.
(d) to develop industries.
Answer:
(b)
Explanation: In 1991, India met with an economic crisis due to its external debt. The government was facing many problems such as it was not able to make repayments for its borrowings. The crisis was further compounded by rising prices of essential goods.
Q 2. Quantitative restriction is also called
(a) import duties.
(b) tariff.
(c) quota.
(d) export duties.
Answer:
(c)
Explanation: Trade between countries is restricted through tariffs and quotas. Quotas are also called quantitative restrictions.
Q 3. Quantitative restrictions are put
(a) to protect domestic producer.
(b) to protect domestic consumer.
(c) to enhance foreign reserve.
(d) to deregulate industries.
Answer:
(a)
Explanation: Government can decide on a limit on the quantity of a good to be exported or imported. All the exporters have to bid for their share within that limit. Similarly there is an import quota. These restrictions are put to protect domestic producer.
Q 4. WTO was established
(a) to control poverty.
(b) to control inflation.
(c) to provide loan to all countries.
(d) to reduce tariffs and trade barriers.
Answer:
(d)
Explanation: It was established purposely to reduce tariffs and other barriers to trade and elimination of discriminatory treatment and give equal opportunities to all countries in international commerce. It tries to provide greater market access to all member countries. It tries to establish a rule based trading regime in which nations cannot place arbitrary restrictions on trade. The aim is ensure optimum utilisation of world resources and protect the environment.
Q 5. Stabilisation measures as a part of NEP were adopted
(a) to correct balance of payment.
(b) to provide subsidy.
(c) to dereserve companies.
(d) to control inflation.
Answer:
(a)
Explanation: The stabilization measures of New Economic policy were intended to correct some of the weaknesses that had developed in the balance of payments and to control inflation.
Q 6. Industrial licensing was abolished from
(a) textile industries.
(b) drugs and pharmaceuticals.
(c) alcohol industries.
(d) hazardous chemicals.
Answer:
(a)
Explanation: Under the policies of 1991, industrial licensing was abolished for most of the industries except certain industries such as drugs and pharmaceuticals.
Q 7. The financial sector in India is controlled by
(a) SBI.
(b) SEBI.
(c) RBI.
(d) Chamber of Indian Industries.
Answer:
(c)
Explanation: All the banks and other financial institutions in India are controlled through RBI.
Q 8. One of the major aims of financial sector reforms is
(a) to enhance the role of RBI in financial sector.
(b) to reduce the role of RBI in financial sector.
(c) to reduce the role of SEBI in financial sector.
(d) to increase the role of SEBI in financial sector.
Answer:
(b)
Explanation: One of the major aims of financial sector reforms is to reduce the role of RBI in financial sector and allow them to take decisions on matters without consulting the RBI.
Q 9. Establishment of public sector banks were allowed after the
(a) foreign exchange reforms.
(b) tax reforms.
(c) investment policy reforms.
(d) financial sector reforms.
Answer:
(d)
Explanation: The reform policies in the financial sector led to the establishment of private sector banks.
Q 10. An example of direct tax is
(a) tax on savings.
(b) tax on imported goods.
(c) tax on income.
(d) tax on commodities.
Answer:
(c)
Explanation: There are two types of taxes - direct and indirect. Direct taxes consist of taxes on income and taxes on commodities.
Q 11. Voluntary disclosure of income is possible through
(a) high rates of taxation.
(b) regressive taxation.
(c) progressive taxation.
(d) moderate rates of income tax.
Answer:
(d)
Explanation: It is widely accepted that moderate rates of income tax encourage savings and voluntary disclosure of income.
Q 12. Devaluation of home currency will led to
(a) an increase in the inflow of foreign exchange.
(b) an decrease in the inflow of foreign exchange.
(c) an decrease in the outflow of foreign exchange.
(d) an increase in the outflow of foreign exchange.
Answer:
(a)
Explanation: Devaluation of home currency will led toan increase in the inflow of foreign exchange.
Q 13. Liberalisation of trade was initiated to
(a) protect domestic producers from foreign competition.
(b) foster the efficiency of local industries.
(c) became a member of WTO.
(d) impose quantitative restrictions.
Answer:
(b)
Explanation: Liberalisation of trade in 1991 was initiated to promote the efficiency of local industries and to adopt the modern technologies.
Q 14. Many of the PSUs during the 1950s and 60s were set up with the intention to
(a) compete with foreign competition.
(b) eradicate poverty.
(c) provide infrastructure.
(d) promote industries.
Answer:
(c)
Explanation: PSUs during the 1950s and 60s were set up with the intention toprovide infrastructure.
Q 15. The sector that have not been benefited from reforms is
(a) industrial sector.
(b) service sector.
(c) public sector.
(d) agricultural sector.
Answer:
(d)
Explanation: Reforms have not benefited theagricultural sector, as public investment in this sector was negligible.
Q 16. The money from disinvestment of PSUs were used
(a) to offset the shortage of government revenue.
(b) for development of PSUs.
(c) for building of social infrastructure.
(d) for setting up more PSUs.
Answer:
(a)
Explanation: The money from disinvestment of PSUs was used to offset the shortage of government revenue rather than using it for the development of PSUs.
Q 17. The long run aspects of the economic reforms was
(a) The set of reform policies can broadly be classified into two groups:
(i) Stabilization measures and
(ii) Structural reform measures.
(i) Stabilization measures are short term measures. They intended to correct immediately some weaknesses, which had crept in the economy like the adverse balance of payment situation and inflation. There was a need to have enough foreign exchange reserves and keep the prices of essential goods in control. This was done by borrowing from World Bank, devaluing rupee, and tighter money supply.
(ii)Structural remedies are long-term changes aimed at improving the efficiency of the economy and increasing its international competitiveness, so that the same situation does not arise again. This required long term reforms of industrial policy, trade policies, fiscal and monetary policies.
Q 18. Foreign direct investment means
(a) Investment of foreign assets into domestic structures.
(b) Investment in equity.
(c) Investment in