Indian Economy Quiz 6

In economics, Gresham's law is a monetary principle stating that “bad money drives out good”. For example, if there are two forms of commodity money in circulation, which are accepted by law as having similar face value, the more valuable commodity will gradually disappear from circulation.

Inflation can be controlled by a contractionary monetary policy is one common method of managing inflation. A contractionary policy aims to reduce the supply of money within an economy by lowering the prices of bonds, rising interest rates and rising tax rates.

A commercial bank is a financial institution that accepts deposits, offers checking and savings account services, and makes loans. A commercial bank can grant a loan only if it has the permission of Reserve Bank of India (RBI).

Per capita income (PCI) is a measure of the amount of money earned per person in a nation or geographic region. It is calculated by dividing the national income by its total population.

Monopolistic competition characterizes an industry in which many firms offer products or services that are similar substitutes. Excess capacity is more defined under monopolistic competition due to the nature of the market structure.

Absolute poverty is when household income is below a certain level, which makes it impossible for the person or family to meet basic needs of life including food, shelter, safe drinking water, education, healthcare, etc.

Consumption is the use of utility whereas production is creation of utility. In fact, their difference is not so fundamental. Both these are two different aspects of the same activity. For example, when a carpenter makes a chair, he performs an act of production by increasing the utility of log of wood.

Antyodaya Anna Yojana (AAY) is the sponsored scheme of Government of India to provide highly subsidised food to millions of the poorest families. The scheme was implemented in 2000. AAY scheme covers the poorest of the poor by supply of food and other important commodities for their daily needs.

Per capita income is a measure of the amount of money earned per person in a nation or geographic region. It is calculated by dividing country's national income by its population.

Monopolistic competition is a type of imperfect competition such that there are many producers competing against each other, but selling products that are differentiated from one another and hence are not perfect substitutes.