Indian Economy Quiz 7

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.

Interest rates are determined by RBI who actively commit to maintaining a target interest rate. They do so by intervening directly in the open market through open market operations (OMO), buying or selling Treasury securities to influence short-term rates.

The estimate of National Income in India was, for the first time, prepared by Dada Bhai Naoroji in 1876 for the year 1867-68.

The current system of Indian government to issue notes is 'Minimum Reserve System'. Under this policy, the minimum reserves to be maintained in the form of gold and foreign exchange should consist of ₹200 crore. Out this reserve, the value of gold to be maintained is ₹115 crore.

Bull and bear are related to the Stock market. A 'bull' by definition is an investor who buys shares because they believe the market is going to rise; whereas a 'bear' will sell shares as they believe the market is going to turn negative.

From 1951 to 2017, the Indian economy was premised on the concept of planning. This was carried through the Five-Year Plans, developed, executed, and monitored by the Planning Commission. The Fourth Five-Year Plan (1969–1974) set before itself the two principal objectives – growth with stability and progress towards self-reliance.

Producer surplus is the difference between how much a person would be willing to accept for given quantity of a good versus how much they can receive by selling the good at the market price. The difference or surplus amount is the benefit the producer receives for selling the good in the market.

Net investment is the total amount of money that a company spends on capital assets, minus wear and tear (cost of the depreciation) of those assets.

Non-Plan Expenditure is money that's spent on sustaining the country like defence, postal deficit, subsidies, etc. and Plan Expenditure is the money that is spent on improving the country like the money spent on dams, roads, etc. The biggest items of Non-Plan Expenditure are interest payments and debt servicing, defence expenditure and subsidies.

Fiscal policy refers to the use of the government budget to affect the economy. This includes government spending and levied taxes. In deficit financing, a government spends more money than it receives as revenue, the difference being made up by borrowing or minting new funds.