Prasanna

Development Experience (1947-90) and Economic Reforms Since 1991 Class 12 MCQs Questions with Answers

Question 1.

India entered the ………….. stage of Demographic Transition after the year 1921.

(A) forth
(B) second
(C) third
(D) first
Answer:
(B) second

Explanation:
The first stage of demographic transition was experienced in India, during the period of 1891-1921.

Question 2.

During British period, Indian Economy was:

(A) Semi-feudal economy.
(B) Disintegrated economy.
(C) Colonial economy.
(D) All of the above.
Answer:
(D) All of the above.

Question 3.

Match the items in Column A to that of Column B and choose the correct alternative:

(A) 1 – (a)
(B) 2 – (b)
(C) 3 – (c)
(D) 4 – (d)
Answer:
(B) 2 – (b)

Explanation:
During the British rule, some basic infrastructure was developed in the form of railways, water transport, ports, post and telegraph, etc. However, the real intension behind these developments was to serve their own colonial interest.

Question 4.

During British regime, which one of the following works was not performed?

(A) Establishment of railways
(B) Establishment of telephone system
(C) Establishment of wire-less system
(D) Establishment of Metro in Delhi
Answer:
(D) Establishment of Metro in Delhi

Explanation:
The construction of fhe Delhi Metro began in 1998 and Delhi metro started in December, 2002.

Question 5.

In British India, cloth industry was concentrated at:

(A) Ahmedabad
(B) Hyderabad
(C) Bengaluru
(D) Ghaziabad
Answer:
(A) Ahmedabad

Explanation:
The doth industry during British India was concentrated at Ahmedabad, Gujarat, India. The textile industry of Ahmedabad, Gujarat, India has a history since the the 19th century. The Indian doth industry was considered from the very anrient times as one of the finest industries of the world.

Question 6.

From the set of statements given in Column A and Column B, choose the correct pair of statement:

(A) 1 – (a)
(B) 2 – (b)
(C) 3 – (c)
(D) 4 – (d)
Answer:
(B) 2 – (b)

Explanation:
Formal and modem census, as they are now, were conducted non- synchronously between between 1865 and 1872 in different parts of the country. This effort which ends in 1872 has been called the first census in India. However, the first synchronous census in India was held in 1881.

Question 7.

Which of the following statements is not true about the agricultural sector at the time of independence?

(A) The agricultural produce was highly affected by Zamindari system.
(B) There were a large number of landless and bonded labours.
(C) The yield per hector was very less.
(D) There was heavy mechanisation of agriculture
Answer:
(D) There was heavy mechanisation of agriculture

Explanation:
Farmers had not enough means to undertake mechanised methods of cultivation.

Question 8.

Which of the following statements is not true about the industrial sector at the time of independence?

(A) Industrialisation of Indian Handicraft Industry
(B) One sided modern industrial structure
(C) Lack of capital goods industries
(D) Limited operation of public sector
Answer:
(A) Industrialisation of Indian Handicraft Industry

Explanation:
Traditional handicraft industries started declining in the 18th century and proceeded rapidly almost to the beginning of the 19th century. This process is called as de-industrialisation.

Question 9.

Match the items in column A to that of Column B and choose the correct option:

(A) 1 – (a)
(B) 2 – (b)
(C) 3 – (c)
(D) 4 – (d)
Answer:
(B) 2 – (b)

Question 10.

First attempt to estimate the National Income in India during British period was made by :

(A) Findlay Shirras
(B) William Digby
(C) Dadabahi Naoroji
(D) YKR.VRao jRj
Answer:
(C) Dadabahi Naoroji

Explanation:
Dadabhai Naoroji was the first to estimate the country’s per capita national income during the British rule for the year 1888.

Question 11.

Indian Planning Commission was constituted in:

(A) 1947
(B) 1950
(C) 1951
(D) 1971
Answer:
(B) 1950

Explanation:
Planning Commission, agency of the government of India established in 1950 to oversee the country’s economic and social development, chiefly through tire formulation of five-year plAnswer:

Question 12.

National Development Council has been Constituted in:

(A) 1950
(B) 1947
(C) 1951
(D) 1952
Answer:
(D) 1952

Explanation:
It was established on 6 August 1952 to strengthen and consolidate national efforts and resources to fund the Five Year Plan of the Planning Commission, to promote common economic policies across all key sectors, and to ensure balanced and rapid development in all parts of the country.

Question 13.

First Five Year Plan was started on:

(A) 15th August, 1947
(B) 1st April, 1951
(C) 2nd October, 1956
(D) 1st July, 1962
Answer:
(B) 1st April, 1951

Explanation:
The First Five-year Plan was launched in 1951 which mainly focused in the development of the primary sector.

Question 14.

Plan Holiday Period was:

(A) 1961-64
(B) 1966-69
(C) 1972-75
(D) 1978-81
Answer:
(B) 1966-69

Explanation:
The government was forced to declare “plan holidays” (from 1966 to 1967, 1967-68, and 1968-69) due to miserable failure of the Third Flan.

Question 15.

Identify the correctly matched pair in Column A and Column B from the following:

(A) 1 – (a)
(B) 2 – (b)
(C) 3 – (c)
(D) 4 – (d)
Answer:
(C) 3 – (c)

Explanation:
It was established on 6 August, 1952 to strengthen and consolidate national efforts and resources to fund the Five Year Plan of the Planning Commission, to promote common economic policies across all key sectors, and to ensure balanced and rapid development in all parts of the country.

Question 16.

Duration of Second Five Year Plan in India was:

(A) 1950 – 55
(B) 1951- 56
(C) 1956 – 61
(D) 1953 – 58
Answer:
(C) 1956 – 61

Explanation:
Second Five-year Plan was made for the duration of 1956 to 1961, under the leadership of Jawaharlal Nehru with main focus on the industrial development of the country.

Question 17.

Mahalanobis Model was adopted in Indian Planning in:

(A) First Plan
(B) Second Plan
(C) Third Plan
(D) Fourth Plan
Answer:
(B) Second Plan

Explanation:
This model was created as a review framework for India’s Second Five-Year Plan in 1955 with the appointment of Prime Minister Jawaharlal Nehru, as India saw the need to introduce a formal-plan model after the First Five Year Plan (1951-1956).

Question 18.

Which of the following statements is not true about the Planning commission?

(A) The Planning Commission of India was established on 15th March, 1952.
(B) Its objective was to evaluate the physical, capital and human resources and on this basis make programmes for the Plan Development and its evaluation.
(C) The Planning Commission of India has now been dissolved in 2015.
(D) It was replaced by National Institution for Transforming India (NITI) Aayog.
Answer:
(A) The Planning Commission of India was established on 15th March, 1952.

Question 19.

Which of the following statements is not true about the characteristics of Planning?

(A) Maximum utilisation of resources
(B) Applicable on the whole economy
(C) Central Planning Authority
(D) No interference by the State
Answer:
(D) No interference by the State

Question 20.

Identify the correctly matched pair in Column A and Column B from the following:

(A) 1 – (a)
(B) 2 – (b)
(C) 3 – (c)
(D) 4 – (d)
Answer:
(B) 2 – (b)

Explanation:
Second Five-year Plan was made for the duration of 1956 to 1961, under the leadership of Jawaharlal Nehru with main focus on the industrial development of the country.

Question 21.

Identify the correctly matched pair in Column A and Column B from the following:

Economic planning is often defined as a continuous process that involves making decisions or choosing alternatives to use existing resources to the fullest for the purpose of achieving certain goals in the future.Explanation:(A) 1 – (a)
(B) 2 – (b)
(C) 3 – (c)
(D) 4 – (d)
Answer:
(B) 2 – (b)

Question 22.

Green revolution implies:

(A) Increase in area under rice crops.
(B) Increase in area under all the crops.
(C) Increase in area under food grains crops.
(D) Increase in production of food grains in short period.
Answer:
(D) Increase in production of food grains in short period.

Explanation:
The Green Revolution was intended to mean that the path forward in food production is increasing in production per hectare in short-run, not the expansion of the area.

Question 23.

Which of the following elements is with green revolution?

(A) Improved seeds
(B) New strategy for agriculture
(C) Fertilizers
(D) Increase in population
Answer:
(D) Increase in population

Explanation:
Green Revolution means a large increase in crop production in developing countries achieved by the use of artificial fertilizers, pesticides, and high-yield crop varieties.

Question 24.

Which crop was benefitted most by green revolution?

(A) Wheat
(B) Tea
(C) Cotton
(D) Oilseeds
Answer:
(A) Wheat

Explanation:
Post-Green Revolution, the production of wheat and rice doubled due to initiatives of the government.

Question 25.

Green revolution increased the use of ……………

(A) Improved seeds
(B) Irrigation
(C) Chemical fertilizers
(D) All of the above
Answer:
(A) Improved seeds

Explanation:
Green Revolution means a large increase in crop production in developing countries achieved by the use of artificial fertilizers, pesticides, and high-yield crop varieties.

Question 26.

Main element of Green Revolution is:

(A) HYV seeds
(B) Use of fertilizers
(C) Extension of irrigation facilities
(D) All of the above
Answer:
(D) All of the above

Question 27.

Identify the correct pair of terms given in Column A by matching them with respective concepts in Column B:

(A) 1 – (a)
(B) 2 – (b)
(C) 3 – (c)
(D) 4 – (d)
Answer:
(A) 1 – (a)

Explanation:
Agriculture is the primary source of livelihood for about 58% of India’s population.

Question 28.

Founder of Green Revolution is:

(A) Norman E. Borlaug
(B) M.S. Swaminathan
(C) Gerri Baker
(D) None of the Above
Answer:
(A) Norman E. Borlaug

Explanation:
The Green Revolution was started by Norman Borlaug in Mexico in the 1940s.

Question 29.

Fixation of Maximum Land Ceiling is one type of:

(A) Technical reform
(B) Institutional reform
(C) Structural reform
(D) Market reform
Answer:
(B) Institutional reform

Question 30.

In India, Green Revolution was started in:

(A) Decade of 1960
(B) Decade of 1970
(C) Decade of 1980
(D) Decade of 1990
Answer:
(A) Decade of 1960

Explanation:
In India, the Green Revolution first began in the late 1960s. With its success, India achieved food satisfaction within a decade in the late 1970s.

Question 31.

The most benefited state due to green revolution is:

(A) Odisha
(B) Bihar
(C) Kerala
(D) Punjab
Answer:
(D) Punjab

Explanation:
Among the Indian states that is said to have benefitted most from the Green Revolution in India is the state of Punjab, where food-grains production increased from 5.37 million tonnes in 1965-66 to 32 million tonnes in 1995-96.

Question 32.

Which of the following is not true regarding the importance of agriculture in the Indian Economy?

(A) Main source of structural unemployment
(B) Contribution in National Income
(C) Base of industrialisation
(D) Base of economic development
Answer:
(A) Main source of structural unemployment

Question 33.

Which of the following is not true about the benefits of Green Revolution?

(A) Rise in production and productivity
(B) Increase in income
(C) Increase in employment
(D) Rural disparity
Answer:
(D) Rural disparity

Question 34.

Match the following items in Column A to those in Column B and choose the correct alternative:

Explanation:(A) 1 – (a)
(B) 2 – (b)
(C) 3 – (c)
(D) 4 – (d)
Answer:
(A) 1 – (a)

The Prime Minister is the Chairman of the Planning Commission which works under the overall guidance of the National Development Council.

Question 35.

Identify the correctly matched pair from Column A to that of Column B:

(A) 1 – (a)
(B) 2 – (b)
(C) 3 – (c)
(D) 4 – (d)
Answer:
(A) 1 – (a)

Explanation:
HYV seeds are a variety of high yield seeds with a short life cycle and thus enable farmers to grow their own crops more often.

Question 36.

In how many categories industries were divided in Industrial Policy, 1956?

(A) 3
(B) 2
(C) 5
(D) 4
Answer:
(A) 3

Explanation:
Industries were divided into 3 categories in Industrial Policy, 1956:
Schedule A: Industries that are exclusively owned by the state.
Schedule B: In this, Industries can be under the private sector, but the starting of the new units will be under the public sector control. Schedule C: Some industries will be under the private sector, but these have to take a license from the public sector.

Question 37.

Liberalised Industrial Policy was announced on:

(A) April 1,1991
(B) May 1,1991
(C) June 24,1991
(D) July 24,1991
Answer:
(D) July 24,1991

Explanation:
The long-awaited liberalised industrial policy was announced by the Government of India in 1991 during the country’s major economic downturn. The aim of the policy was to increase efficiency and accelerate economic growth.

Question 38.

Identify the correctly matched pair from Column A to that of Column B:

(A) 1 – (a)
(B) 2 – (b)
(C) 3 – (c)
(D) 4 – (d)
Answer:
(D) 4 – (d)

Explanation:
Industrial Policy Resolution of 1956 (IPR 1956) is a resolution adopted by the Indian Parliament in April 1956. According to this decision the purpose of the socio-economic policy in India was to establish a social pattern.

Question 39.

First Industrial Policy of independent India was declared in:

(A) 1947
(B) 1948
(C) 1950
(D) 1951
Answer:
(B) 1948

Explanation:
After gaining independence, the Government of India announced its first ‘ Industrial Fblicy on April 6,1948. The Industrial Policy 1948 was introduced in parliament by the Minister of Industry Dr. Shyama Prasad Mukherjee.

Question 40.

Process of industrialisation was started in India in:

(A) First Plan
(B) Second Plan
(C) Third Plan
(D) Fourth Plan
Answer:
(B) Second Plan

Explanation:
The second plan was to set India on the path of industrialisation.

Question 41.

To increase the annual growth rate of industries, efforts should be made for:

(A) Full utilisation of production capacity
(B) Use of modern technology
(C) Industrial peace
(D) All of the above
Answer:
(D) All of the above

Question 42.

Industrial Policy in force presently in India is:

(A) 1948
(B) 1956
(C) 1977
(D) 1991
Answer:
(D) 1991

Explanation:
The last industrial policy was implemented in 1991. The aim of the policy was to increase efficiency and accelerate economic growth.

Question 43.

Industries (Development and Regulation) Act was implemented in:

(A) 1951
(B) 1952
(C) 1953
(D) None of the above
Answer:
(A) 1951

Explanation:
Industries (Development and Regulation) Act, 1951, includes the industrial development policies regulated by Central Government in India.

Question 44.

Industrial Licensing Policy was made liberal particularly in:

(A) 1990
(B) 1991
(C) 1992
(D) 1985
Answer:
(B) 1991

Question 45.

Problem of Small-Scale Industries is:

(A) Shortage of raw material
(B) Inadequate use of capacity
(C) Shortage of capital and credit
(D) All of the above
Answer:
(D) All of the above

Question 46.

Which of the following statements is not true about problems in public sector in India?

(A) Lack of technical efficiency
(B) Discriminating policy of organisation
(C) Lack of incentives
(D) Adequate control of parliament
Answer:
(D) Adequate control of parliament

Question 47.

Identify the correct pair by matching the items in Column A to that of Column B:

(A) 1 – (a)
(B) 2 – (b)
(C) 3 – (c)
(D) 4 – (d)
Answer:
(A) 1 – (a)

Question 48.

Which of the following statements is not true about the problems of small sector in India?

(A) Shortage of capital
(B) Undeveloped production system
(C) Problem of raw material
(D) Lack of unorganised market
Answer:
(D) Lack of unorganised market

Explanation:
One of the problems faced by small scale sector in India is lack of organised sector.

Question 49.

Identify the correctly matched pair from Column A to that of Column B:

(A) 1 – (a)
(B) 2 – (b)
(C) 3 – (c)
(D) 4 – (d)
Answer:
(C) 3 – (c)

Question 50.

After independence, India had favourable Balance of Trade situations for:

(A) Two times
(B) Three times
(C) Four times
(D) Always
Answer:
(A) Two times

Question 51.

What percentage of India’s share in World Trade has been targeted in Foreign Trade Policy, 2004-2009?

(A) 1 percent
(B) 2 percent
(C) 1.5 percent
(D) 2.5 percent
Answer:
(C) 1.5 percent

Explanation:
India had a share of 0.8% in Foreign Trade between 2003-2004, the target in this policy was set to achieve 1.5% share in world trade by 2009.

Question 52.

Trade policy was made liberal in India in:

(A) 1990
(B) 1991
(C) 1992
(D) 1993
Answer:
(B) 1991

Explanation:
The long-awaited liberalised industrial policy was announced by the Government of India in 1991 during the country’s major economic downturn. The aim of the policy was to increase efficiency and accelerate economic growth.

Question 53.

Import-Export Policy 2009-14 was declared on:

(A) 27th August, 2009
(B) 28th March, 2009
(C) Ist April, 2002
(D) Ist April, 2009
Answer:
(A) 27th August, 2009

Explanation:
On August 27,2009. the Minister of Commerce and Industry, Anand Sharma, unveiled a five-year Foreign Trade Policy (FTP) for 2009-2014. Aiming to curb cuts in exports for ten consecutive months, the new FTP has a few steps to ensure healthy growth in foreign trade. The steps include financial approval and process relaxation.

Question 54.

Features of New EXIM Policy are:

(A) Abolition of quantitative restriction on export.
(B) Special incentives on exports of agricultural products.
(C) Improvement in facilities of Special Economic Zones.
(D) All of the above.
Answer:
(C) Improvement in facilities of Special Economic Zones.

Question 55.

Identify the correctly matched pair of Column A to that of Column B:

(A) 1 – (a)
(B) 2 – (b)
(C) 3 – (c)
(D) 4 – (d)
Answer:
(D) 4 – (d)

Explanation:
When there is excess of imports over exports, it is called an unfavourable ’ balance of trade.

Question 56.

Need for import substitution policy is due to:

(A) Shortage of foreign exchange.
(B) Adverse Balance of Trade.
(C) Devaluation of money.
(D) All of the above.
Answer:
(D) All of the above.

Question 57.

To increase foreign trade, we should resort to:

(A) Reduction in tariff rates.
(B) Credit facilities to exporters from foreign markets.
(C) To make available better infrastructural facilities to exporters.
(D) All of the above.
Answer:
(D) All of the above.

Question 58.

Identify the correctly matched pair of Column A to that of Column B:

(A) 1 – (a)
(B) 2 – (b)
(C) 3 – (c)
(D) 4 – (d)
Answer:
(B) 2 – (b)

Question 59.

Which of the following statement is not true about the need for import substitution for Indian economy?

(A) Unfavourable balance of trade.
(B) Devaluation of rupee.
(C) Abundance of foreign aid.
(D) Shortage of essential commodities.
Answer:
(C) Abundance of foreign aid.

Explanation:
Import Substitution industrializa-tion (ISI) is a trade and economic policy that advocates replacing foreign imports with do-mestic production to protect domestic indus-tries. Thus, there was no requirement of foreign aid .

Question 60.

Identify the correctly matched pair of Column A to that of Column B:

(A) 1 – (a)
(B) 2 – (b)
(C) 3 – (c)
(D) 4 – (d)
Answer:
(D) 4 – (d)

Explanation:
Aim of import substitution was to decrease their dependence on developed countries.

Question 61.

……………… was the Indian Finance Minister in 1991, acknowledged for his capabilities to steer away the economic crisis looming large on the erstwhile Indian Economy.

(A) Dr. Subramanian Swamy
(B) Dr. Manmohan Singh
(C) Pranab Mukherjee
(D) Dr. Urjit Patel
Answer:
(B) Dr. Manmohan Singh

Question 62.

To accelerate the rate of growth, the reform programmes were initiated in the year:

(A) 1990
(B) 1991
(C) 1993
(D) 1994
Answer:
(B) 1991

Explanation:
India’s New Economic Policy was introduced in 1991 under the leadership of E V Narasimha Rao. The Narasimha Rao government has reduced import duties, opened up a private sector, and reduced Indian currency to increase exports. This is also known as the LPG Model for growth.

Question 63.

Identify the correctly matched pair in Column A and Column B from the following:

(A) 1 – (a)
(B) 2 – (b)
(C) 3 – (c)
(D) 4 – (d)
Answer:
(C) 3 – (c)

Explanation:
GST: 2017
Demonetisation: 2016
Liberalisation of Trade Policy: 1991
Nationalisation of Banks: 1969

Question 64.

Out of the following, which industry is reserved for public sector?

(A) Atomic energy
(B) Industrial explosive
(C) Medicines
(D) All of the above
Answer:
(A) Atomic energy

Explanation:
The three industries: Railways, Atomic Energy and Defence, are reserved for the operation and management by government only. This is due to the need for security and confidentiality to be maintained especially in the operations of the Atomic Energy and Defence sectors of the country.

Question 65.

New Economic Policy, 1991 is also called:

(A) L – Turn policy
(B) S – turn policy
(C) U – turn policy
(D) None of the above
Answer:
(C) U – turn policy

Question 66.

New Economic Policy includes:

(A) Liberalisation
(B) Privatisation
(C) Globalisation
(D) All of these
Answer:
(D) All of these

Explanation:
LPG stands for Liberalisation, Privatisation, and Globalisation.

Question 67.

Which was not the objective of demonetisation 2016?

(A) To curb corruption
(B) To curb counterfeit currency
(C) To stop the use of low denomination notes for terrorist activities
(D) To discourage the accumulation of “black money”
Answer:
(C) To stop the use of low denomination notes for terrorist activities

Explanation:
On November 8, 2016, government announced a landmark program, which had a significant impact on the economy. The two largest denomination notes, ₹ 500 and ₹ 1000, immediately were “demonetized”, ceased to be official tenders. The purpose of this action was to prevent corruption; to curb counterfeiting; to stop the use of high denomination notes in terrorist activities; and especially the accumulation of “black money”, made by unpublished revenue to the tax authorities.

Question 68.

What kind of Tax is GST?

(A) Direct Tax
(B) Indirect Tax
(C) Depends on the type of goods and services
(D) None of the above
Answer:
(B) Indirect Tax

Explanation:
Goods and Services Tax is an indirect tax used in India on the supply of goods and services.

Question 69.

Which of the following statements is not true regarding the benefit of Privatisation?

(A) Less political intervention
(B) Improvement in economic efficiency and technical efficiency
(C) Increased accountability
(D) Destabilisation of economy
Answer:
(D) Destabilisation of economy

Question 70.

Which of the following statements is not true regarding the benefit of GST?

(A) GST provides comprehensive and wider coverage of input credit set-off, you can use service tax credit for the payment of tax on sale of goods, etc.
(B) All indirect taxes in state and central level have been included by GST.
(C) Uniformity of tax rates across the states.
(D) Ensure better compliance due to aggregate tax rate reduction.
Answer:
(B) All indirect taxes in state and central level have been included by GST.

Question 71.

Identify the correctly matched pair in Column A and Column B from the following:

(A) 1 – (a)
(B) 2 – (b)
(C) 3 – (c)
(D) 4 – (d)
Answer:
(C) 3 – (c)

Explanation:
Uniformity of Taxes: Benefit of GST At the State Level: SGST One Point Single Tax: Objective of GST Brought an end to black money: Effect of Demonetisation.

Assertion and Reason Based MCQs

Directions: In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
(A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of the Assertion (A).
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of the Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false.
(D) Assertion (A) is false, but Reason (R) is true.

Question 1.

Assertion (A): India became an exporter of primary products and an importer of finished consumer and capital goods produced in Britain.
Reason (R): Restrictive policies of commodity production, trade and tariff pursued by the colonial government adversely affected the structure, composition and volume of India’s foreign trade.

Answer:
(A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of the Assertion (A).

Question 2.

Assertion (A): During colonial period, India’s export trade was export surplus.
Reason (R): During colonial period, India’s export were more than its import.

Answer:
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of the Assertion (A).

Explanation:
British policies made Indian handicrafts more expensive and its global demand declining sharply. As a result, the export basket of India during the colonial period contained major products such as sugar, jute, raw silk, indigo, wool, etc. and finished imports for consumers such as cotton silk and wool garments and large goods such as light machines from Britain. India has registered a large export balance during the colonial period.

Question 3.

Assertion (A): Indian economy was source of raw material for British industries.
Reason (R): During colonial period, the raw materials were exported from India to Britain to be used in the industry.

Answer:
(A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of the Assertion (A).

Question 4.

Assertion (A): India adopted import substitution policy during the first seven Five-year plans precisely.
Reason (R): Import substitution was to substitute the imports of our economy with domestic production.

Answer:
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of the Assertion (A).

Explanation:
India adopted import substitution I policy during the first seven Five-year plans I precisely to protect domestic industries.

Question 5.

Assertion (A): Equity in agriculture called for land reforms which primarily refer to change of ownership from tillers to Zamindars.
Reason (R): The Zamindari system introduced by the British Raj led to the destruction of the agricultural sector in India so the land reforms had to be introduced.

Answer:
(D) Assertion (A) is false, but Reason (R) is true.

Explanation:
In post-independent India, equity in agriculture called for land reforms which primarily refer to change in the ownership of landholdings from Zamindars to tillers.

Question 6.

Assertion (A): The goal of equity was fully served by abolition of intermediaries.
Reason (R): The growth of the country can lead to income inequality and with more modernization unemployment will increase leading to people living under poverty line.

Answer:
(D) Assertion (A) is false, but Reason (R) is true.

Explanation:
The goal of equity was not fully served by abolition of intermediaries as Zamindars continued to own large areas of land due to loopholes in the legislation.

Question 7.

Assertion (A): The major policy initiatives i.e. land reforms and green revolution helped India to become self-sufficient in food grains production.
Reason (R): The proportion of people depending on agriculture did not decline as expected.

Answer:
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of the Assertion (A).

Explanation:
In this case, insecticides and pesticides were used which resulted in greater production of wheat and rice.

Question 8.

Assertion (A): Green revolution though improved the production of crops but did not increase the income of the farmers.
Reason (R): The farmers sold more crops at lesser price.

Answer:
(D) Assertion (A) is false, but Reason (R) is true.

Explanation:
By 1970, Punjab was producing 70% of the country’s total food grains, and farmers’ incomes were increasing by over 70%.

Question 9.

Assertion (A): Green revolution increased the productivity due to the extensive use of fertilisers.
Reason (R): The government gives economic subsidy in the fertilisers to ensure that farmers have adequate availability of fertilizers.

Answer:
(A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of the Assertion (A).

Question 10.

Assertion (A): Economy cannot develop without industrial development.
Reason (R): Industrial development leads the economy to have high rate of employment and less poverty in the economy.

Answer:
(A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of the Assertion (A).

Question 11.

Assertion (A): In cottage industries, machines are not used whereas these are used in small sector.
Reason (R): Cottage industries are smaller industries than the small sector industries.

Answer:
(C) Assertion (A) is true, but Reason (R) is false.

Explanation:
Cottage industries are industries whose labour force consists of family units or individuals working at home with their own equipment.

Question 12.

Assertion (A): Small Scale Industries face a shortage of capital.
Reason (R): The government is reluctant in providing them any assistance and loans.

Answer:
(C) Assertion (A) is true, but Reason (R) is false.

Explanation:
The NSIC provides for financial aid to procure raw materials, for activities in relation to marketing and for financing with banks through syndication to MSMEs.

Question 13.

Assertion (A): Finished goods were exported from India during the Colonial Era.
Reason (R): India was a hub for raw materials for the British Industries.

Answer:
(D) Assertion (A) is false, but Reason (R) is true.

Explanation:
From the time of Independence, India has been one of the important trading countries, exporting primary items like cotton, raw silk, sugar, wool, jute, and indigo, etc. and importer of finished consumer goods like woollen clothes, cotton, silk, and capital goods like light machinery manufactured in Britain.

Question 14.

Assertion (A): During British rule, India saw huge drain of wealth.
Reason (R): India generated large export surplus during the period.

Answer:
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of the Assertion (A).

Explanation:
The drain of wealth means that British economic policies in India were driven primarily by grabbing huge profits from Indian trade. Foreign trade in India has produced a large export balance. This export balance did not result in the importation of gold or silver to India. There was drain of India’s wealth into Britain.

Question 15.

Assertion (A): Import substitution leads to unfavourable foreign trade.
Reason (R): Import substitution leads the goods to be produced in the country itself.

Answer:
(A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of the Assertion (A).

Question 16.

Assertion (A): Every year government fixes a target for disinvestment of Public Sector Enterprises (PSEs).
Reason (R): Disinvestment is an excellent tool for discarding the loss incurring Public Sector Enterprises (PSEs).

Answer:
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of the Assertion (A).

Explanation:
It was considered that private funds and management skills could be used effectively to improve the performance of PSUs.

Question 17.

Assertion (A): Foreign exchange crisis was the basis of economic policies of liberalisation, privatisation and globalisation.
Reason (R): During the fiscal year 1990-91, foreign exchange reserves fell to a lower level of ₹ 2,400 crores, which was just enough for the payments of three weeks imports.

Answer:
(A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of the Assertion (A).

Question 18.

Assertion (A): Navaratna Policy of the government helped in improving the performance of public sector undertakings in India.
Reason (R): Navaratna Policy boosted the public sector industries and helped them to produce more efficiently and also made them competitive in the market.

Answer:
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of the Assertion (A).

Explanation:
Navaratna Policy boosted the public sector industries as they were given greater managerial and operational autonomy.

Case-Based MCQs

I. Read the following hypothetical text and answer question that follow:
India’s Micro, Small and Medium Enterprises (MSME) sector is poised for a mega transformation in 2020, with the launch of an Alibaba-like e-marketplace, trendy yet affordable khadi products to appeal to the masses and digital data-based credit ratings to help entrepreneurs avail loans However, the MSME sector is often considered the bulwark of the economy as it contributes around 29% to the GDP and 48% to the Indian exports.

There is an urgent need of major reforms and policy interventions towards ensuring timely availability of low-cost credit, improving ease of doing business and technological upgradation, to take on the formidable challenge of creating millions of jobs, ensure equitable distribution of national income and achieving large-scale import substitution.

The World Bank has recently approved loan worth $750 million to address the immediate liquidity and credit needs of India’s MSME sector that has been severely impacted by the Covid-19 crisis. This will give a push to the Atmanirbhar Bharat vision of the government.

Question 1.

Identify which of the following is not an advantage of the MSME sector?

(A) It is suited for the utilization of local resources.
(B) It is helpful in creation of employment opportunities.
(C) It requires more capital than labour.
(D) It ensures equitable distribution of income in the country.
Answer:
(C) It requires more capital than labour.

Explanation:
MSMEs don’t require heavy capital investment as they produce simple products by using simple technologies mainly labour-intensive production techniques.

Question 2.

MSME sector suffered to a large extent in COVID-19 pandemic situation due to ……………

(A) Liquidity crunch
(B) Obsolete technology
(C) Government Interventions
(D) All of the above
Answer:
(A) Liquidity crunch

Explanation:
The World Bank has recently approved loan worth $750 million to address the immediate liquidity and credit needs of India’s MSME sector that has been severely impacted by the Covid-19 crisis.

Question 3.

Read the following statements – Assertion (A) and Reason (R).
Assertion (A): Small scale industries ensure a more equitable distribution of national income and wealth.
Reason (R): The ownership of small-scale industries is more wide spread than the ownership of large-scale industries. Select the correct alternative from the following:

(A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of the Assertion (A).
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of the Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false.
(D) Assertion (A) is false, but Reason (R) is true.
Answer:
(A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of the Assertion (A).

Explanation:
The ownership of small- scale industries is with one individual in sole-proprietorship or it can be with a few individuals in partnership.

Question 4.

…………… are the largest employer of the labour force in India.

(A) Agricultural Sector
(B) Small Scale Industries
(C) Cottage Industries
(D) Service Sector
Answer:
(A) Agricultural Sector

Explanation:
The agricultural sector is the largest employer in the Indian economy. Nearly 51% of the population is engaged in this section in one way or the other.

II. Read the following hypothetical text and answer the questions that follow:
The performance of Indian economy during the period of first seven five-year plans (1950-1990) was satisfactory if not very impressive. On the eve of independence, India was an industrially backward country, but during this period of first seven plans our industries became far more diversified, with the stress being laid on the public investments in the industrial sector.

The policy of import substitution led to protection of the domestic industries against the foreign producers but we failed to promote a strong export surplus. Although public sector expanded to a large extent but it could not bring desired level of improvement in the secondary sector. Excessive government regulations prevented the natural trajectory of growth of entrepreneurship as there was no competition, no innovation and no modernization on the front of the industrial sector.

Many Public Sector Undertakings (PSUs) incurred huge losses due to operational inefficiencies, red-tapism, poor technology and other similar reasons. These PSUs continued to function because it was difficult to close a government undertaking even it is a drain on country’s limited resources.

On the Agricultural front, due to the measures taken under the Green Revolution, India more or less became self-sufficient in the production of food grains. So, the needs for reform of economic policy was widely felt in the context of changing global economic scenario to achieve desired growth in the country.

Question 1.

Which of the following was not a reason for the public sector to play a major role in the initial phase of Indian Economic Planning?

(A) Private entrepreneurs lacked sufficient capital for investment.
(B) Government aimed at social welfare.
(C) The market was big enough to encourage private industrialists for investment.
(D) The government wanted to protect the indigenous producers from the foreign competition.
Answer:
(C) The market was big enough to encourage private industrialists for investment.

Question 2.

Inward looking trade strategy aimed at ……………

(A) Protecting domestic industries from international competition
(B) Industrialization
(C) Improving performance of public sector
(D) None of the above
Answer:
(A) Protecting domestic industries from international competition

Explanation:
The policy of import substitution led to protection of the domestic industries against the foreign producers.

Question 3.

Mechanization of the Indian agriculture was one of the causes of ………….. in India.

(A) Green Revolution
(B) White Revolution
(C) Yellow Revolution
(D) None of the above
Answer:
(A) Green Revolution

Explanation:
This necessitated the “Green Revolution”, which was largely due to the advent of technology, improved water supply and better agricultural practices. In addition, the increase in agricultural mechanisation and the use of crop protection systems have also contributed to the emergence of “Green Revolution” in India.

Question 4.

Read the following statements – Assertion (A) and Reason (R).
Assertion (A): Many public sector undertakings incurred huge losses due to operational inefficiencies.
Reason (R): Red-tapism was one of the reasons for continuation of such enterprises.
Select the correct alternative from the following:

(A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of the Assertion (A).
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of the Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false.
(D) Assertion (A) is false, but Reason (R) is true.
Answer:
(A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of the Assertion (A).

Explanation:
Red-tapism refers the practice of requiring excessive paperwork and tedious procedures before official action can be considered or completed.

III. Read the news report given below and answer the questions that follow:
In a 40 minute long speech Prime Minister Narendra Modi announced the demonetization of existing notes of T500 and ₹ 1,000 during a televised address on Tuesday evening. Modi announced that the notes of ₹ 500 and ₹ 1,000 “will not be legal tender from midnight tonight” and these will be “just worthless pieces of paper. PM also urged people to ‘join this mahayojna against the ills of corruption.

Here is a guide for you explaining everything about the move. What is demonetization of currency? Demonetization for us means that Reserve Bank of India has withdrawn the old ₹ 500 and ₹ 1,000 notes as an official mode of payment. According to Investopedia, demonetization is the act of stripping a currency unit of its status as legal tender. What was the reason? The reasoning given by Modi was:
(A) To tackle black money in the economy.
(B) To lower the cash circulation in the country which “is directly related to corruption in our country,” according to PM Modi.
(C) To eliminate fake currency and dodgy funds which have been used by terror groups to fund terrorism in India.
(D) The move is estimated to scoop out more than ₹ 5 lakh crore black money from the economy, according to Baba Ramdev, a staunch Modi supporter.
– “What is demonetisation and why was it done” – The Economic Times – November 09,2020

Question 1.

Why is demonetisation termed as the mahayojna by the Prime Minister?

(A) It is to curb the ills of corruption.
(B) It is to tackle the black money.
(C) It is to digitalise the economy.
(D) All of the above.
Answer:
(A) It is to curb the ills of corruption.

Question 2.

What is not the benefit of demonetisation:

(A) To lower the cash circulation.
(B) To tackle black money in the economy.
(C) To eliminate fake currency
(D) Growth of revenue in States and Union Territories
Answer:
(D) Growth of revenue in States and Union Territories

Question 3.

Demonetisation is an act of …………….. currency unit of its status as legal tender.

(A) Stripping
(B) Covering
(C) Clothing
(D) Removing
Answer:
(A) Stripping

Explanation:
Demonetisation is a situation where the Central Bank of the country (Reserve Bank in India) withdraws the old currency notes of certain denomination as an official mode of payment.

Question 4.

How much black money is the move estimated to scoop out?

(A) ₹ 4 lakh crore
(B) ₹ 5 lakh crore
(C) ₹ 6 lakh crore
(D) ₹ 7 lakh crore
Answer:
(B) ₹ 5 lakh crore

MCQ Questions for Class 12 Economics with Answers