Indian Economy Quiz 7

According to Keynes, employment can be increased by increasing demand and/or investment. demand depends on income and when income rises, demand also rises but not as much as income. A fall in aggregate demand causes a fall in real gross national product and employment.

The euro (symbol €) is the single currency for 19 EU member countries, introduced in 2002 after more than 40 years of treaties and negotiations.

The existence of Black money leads to the creation of a parallel economy. It makes the monetary policies less effective as the government cannot account properly for the money which is not formally included in the system.

A parallel economy is the functioning of an unsanctioned sector in the economy whose objectives run in opposite to the objectives of official, sanctioned or legitimate sector. The term parallel economy is also referred as black economy, unaccounted economy, illegal economy, subterranean economy or unsanctioned economy. The existence of a parallel economy or Black Money makes the monetary policies less effective.

Scheduled Banks in India refer to those banks which have been included in the Second Schedule of Reserve Bank of India Act, 1934. Reserve Bank of India in turn includes only those banks in this Schedule which satisfy the criteria laid down vide section 42 of the said Act.

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.

National income is the sum total value of all goods and services produced in the country during a period of one year.

A bank rate is the interest rate a nation's central bank charges to its domestic banks to borrow money. In India, the RBI set the bank rate.

Open market operations refer to the selling and purchasing of treasury bills and government securities by the central bank of any country (RBI) in order to regulate money supply in the economy.

Professional tax, VAT, and motor vehicle tax are some of the taxes that are levied and collected by the state. It is a direct tax. A person earning an income from salary or anyone practicing a profession such as chartered accountant, company secretary, lawyer, doctor etc. are required to pay this professional tax.