Indian Economy Quiz 2

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.

The different instruments of quantitative credit control technique are Statutory Liquidity Ratio (SLR), Cash Reserve Ratio (CRR), the Bank Rate Policy, Selective Credit Control (SCC), Open Market Operations (OMOs), etc.

Goods and Services Tax (GST) is an indirect tax used in India on the supply of goods and services. It is a comprehensive, multistage, destination-based tax: comprehensive because it has subsumed almost all the indirect taxes except a few state taxes.

“Bad money tends to drive good money out of circulation when both are full legal tender.” This principle is known as Gresham's Law. Gresham's law was originally based on the composition of minted coins and the value of the precious metals used in them.

The ratio of a bank's cash holdings to its total deposit liabilities is called the Cash Reserve Ratio (CRR). CRR is the amount of funds that the banks have to keep with the RBI.

The Report of Vijay Kelkar Committee (Task Force on direct taxes 2002) relates to Direct Tax Reforms. The main recommendations of this committee related to the income tax exemption limit, abolition of wealth tax, etc.

A sunk cost is a cost that has already been incurred and cannot be recovered. Sunk costs are contrasted with prospective costs, which are future costs that may be avoided if action is taken.

RBI buys and sells government securities or bonds to control the money supply and interest rates. To increase the money supply, the RBI will purchase bonds from banks, which injects money into the banking system. It will sell bonds to reduce the money supply. Statutory Liquidity Ratio (SLR) is a minimum percentage of deposits that a commercial bank has to maintain in the form of liquid cash, gold or other securities.

Consumer sovereignty is a theory that states the fact that consumers have the power to determine which products or services are actually produced in a given economy. It is an idea that places the customer's preferences in the centre of the product development funnel.

J.B. Say propounded the market law. Say's Law of Markets is theory from classical economics arguing that the ability to purchase something depends on the ability to produce and thereby generate income. Say reasoned that to have the means to buy, a buyer must first have produced something to sell.