Indian Economy and Finance Mock Test

The demand for a commodity changes due to a change in price. It is called extension and contraction of demand. When there is decrease in price of a commodity there is increase in demand of that commodity.

It refers to the right or ability of an industrial unit to withdraw from or leave an industry or in other words to close down.

The main advantage of devaluation is to make the exports of a country or currency area more competitive, as they become cheaper to purchase as a result. This can increase external demand and improvement in the balance of payment.

A parallel economy is the functioning of an unsanctioned sector in the economy whose objectives run in opposite to the objectives of official, sanctioned or legitimate sector. The term parallel economy is also referred as black economy, unaccounted economy, illegal economy, subterranean economy or unsanctioned economy. The existence of a parallel economy or Black Money makes the monetary policies less effective.

The break-even point (BEP) is the point at which total cost and total revenue are equal, i.e. “even”. In investing, the break-even point is said to be achieved when the market price of an asset is the same as its original cost.

Article 246 of the Indian Constitution, distributes legislative powers including taxation, between the Parliament of India and the State Legislature. Taxes of Central government under constitutionally established scheme of taxation are: taxes on income other than agricultural income; duties of customs; corporation tax; taxes on capital value of assets, taxes on capital of companies, etc.

In economics, capital flight is a phenomenon characterized by large outflows of assets and/or capital from a country due to some events, resulting in negative economic consequences to that country.

Per capita income or total income measures the average income earned per person in a given area in a specified year. It is calculated by dividing the area's total income by its total population. Per capita income is national income divided by population size.

Special drawing rights (SDRs) are supplementary foreign exchange reserve assets defined and maintained by the International Monetary Fund (IMF). SDRs are units of account for the IMF, and not a currency per se. They represent a claim to currency held by IMF member countries for which they may be exchanged.

FERA (Foreign Exchange Regulation Act) was repealed by the Parliament of India in 1999 by the Foreign Exchange Management Act (FEMA), which liberalized foreign exchange controls and removed many restrictions on foreign investment. FERA came into force in 1974.