Indian Economy Quiz 2

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.

When the government disinvests its shares to the extent of 4 to 5 percent to meet the deficit in the budget, this is termed deficit privatization or token privatization.

The Marginal Utility Curve slopes downward from left to right indicating an inverse relationship between marginal utility and the stock of commodity. Marginal utility diminishes as additional units are consumed, which means that each subsequent unit of a good consumed provides less additional utility.

When too much money is chasing too few goods, the situation is Demand-Pull Inflation. It is caused by the overall increase in demand for goods and services, which bids up their prices. This theory can be summarized as “too much money chasing too few goods”.

The Fifth Five-Year Plan laid stress on employment, poverty alleviation (Garibi Hatao), and justice. The plan also focused on self-reliance in agricultural production and defence.

In the case of temporary inflation, the central bank (RBI) generally attempts to reduce the money supply in the economy so as to ease the demand pressure. This helps in arresting price rises in the economy.

Free trade is a trade policy that does not restrict imports or exports. It can also be understood as the free market idea applied to international trade.

Disguised unemployment is unemployment that does not affect aggregate economic output. It occurs when productivity is low and too many workers are filling too few jobs. It can refer to any part of the population that is not employed at full capacity. In India, disguised unemployment is generally observed in the Agricultural sector.

The theory of monopolistic competition is developed by American economist Edward Hastings Chamberlin in his book 'Theory of Monopolistic Competition' (1933).

In economics, equilibrium is a situation in which economic forces such as supply and demand are balanced and in the absence of external influences the values of economic variables will not change. In equilibrium, a perfectly competitive firm will equate marginal revenue with marginal cost.