Indian Economy Quiz 7

Price theory is a microeconomic principle that uses the concept of supply and demand to determine the appropriate price point for a given good or service.

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.

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.

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”.

National income is the accumulated money value of all final goods and services produced in a country during one financial year. Winning a lottery is not included in the national income because it does not add to current flow of goods and services.

As per the Constitution of India, the Finance Commission is appointed every five years and consists of a chairman and four other members. The Finance Commission is constituted by the President under article 280, mainly to give its recommendations on distribution of tax revenues between the Union and the States.

When buying and selling of goods and services takes place within the geographical boundaries of a country, it is referred to as internal trade or domestic trade.

Gross domestic product is a monetary measure of the market value of all the final goods and services produced in a specific time period by countries.

Production function is the maximum set of output(s) that can be produced with a given set of inputs. Use of a production function implies technical efficiency.

Risk-bearing is the most essential function of an entrepreneur. He has to pay to all the other factors of production in advance. There are chances that he may be rewarded with a handsome profit or he may suffer a heavy loss. Therefore, risk-bearing is the final responsibility of an entrepreneur.