chapter 2

Question 1

questions an economy has to answer

Answer 1

1. what to produce
2. how to produce
3. for whom to produce

Question 2

economic system

Answer 2

a system of production, resource allocation and distribution of goods and services within a country

Question 3

three types of economic system

Answer 3

1. capitalist system
2. socialist economy
3. mixed economy

Question 4

capitalist system

Answer 4

An economy system dependent on market forces

Question 5

socialist economy

Answer 5

An economic system in which goods and services are provided by the government based on the needs of the society and not on who can purchase them

Question 6

mixed economy

Answer 6

In a mixed economy the market will provide whatever goods and services can produce well. and the government will provide the essential goods and services which market fails to do.

Question 7

what is a plan?

Answer 7

a plan spells out how the resources of nation should be put to a use

Question 8

when was the planning commission formed?

Answer 8

1950

Question 9

duration of first five year plan

Answer 9

1st April 1951 - 31st march 1956

Question 10

common goals of five year plans

Answer 10

growth
equity
modernisation
self- reliance

Question 11

growth

Answer 11

an increase in the country’s capacity to produce the output of a goods and services within a country

Question 12

growth leads to

Answer 12

1. a large share of productive capital
2. a large size of supporting services like banking or transportation
3. an increase in efficiency of productive capital and services

Question 13

modernisations

Answer 13

adoption of new technology in the production of goods and services to increase the output

Question 14

self-reliance

Answer 14

avoiding imports of those goods which can be produced in India itself

Question 15

purpose of self-reliance was to

Answer 15

1. reduce dependence on the foreign countries on account of goods, capital and technology
2. to avoid foreign interference in the policies of our country

Question 16

Equity

Answer 16

Reduction of inequality of income and wealth

Question 17

the two places where industries where sucessfully set up

Answer 17

1. kolkata
2. Jamshedpur

Question 18

reasons for emphasis on industrial sector

Answer 18

1. poor nation can progress only if they have a good industrial sector
2. provides employment which is stable
3. promotes modernisation and overall prosperity

Question 19

why was public sector playing a critical role in developing private sector ?

Answer 19

1. industrialists did not enough financial and technical resources
2. decision to develop the Indian economy on socialist line
3. the market was not big enough for industrialists

Question 20

three categories in IRP 1956

Answer 20

1. first
2. second
3. third

Question 21

first category of IRP 1956

Answer 21

it comprised industries which would be extensively owned by the government

Question 22

second category of IRP 1956

Answer 22

it considered of industries in which the private sector could supplement the efforts of public sector, with the government taking the sole responsibility of starting a new unit

Question 23

third category of IRP 1956

Answer 23

It consists of remaining industries which were to be in private sector.

Question 24

ways to regulate IPR 1956

Answer 24

1. No new industry was allowed unless an license was obtained from the government
2. even an existing industry had to obtain a license for expanding output or for diversifying production

Question 25

when did Karve committee notice the possibility of using small scale industry for development of rural areas?

Answer 25

1955

Question 26

which committee notice the possibility of using small scale industry for development of rural areas?

Answer 26

Karvee committee

Question 27

why did the government promote small scale industry ?

Answer 27

1. generate more employment 2. ensure more distribution of national income and wealth

Question 28

how did the government promote and protect small-scale industry ?

Answer 28

1. reservation of a number of products 2. grant of concessions

Question 29

import substitution

Answer 29

a policy of replacement or substitution of imports by domestic product

Question 30

forms of protection in import substitution

Answer 30

1. Tariffs 2. Quotas

Question 31

reasons for protection of domestic industries

Answer 31

1. self-reliance/ self- suffiencency 2. saving of scare foreign exchange

Question 32

positive effect of trade and industrial sector

Answer 32

1. diversification of industries 2. GDP contribution of industrial sector increased from 13% in 1950-1951 to 24.6% in 1990-1991 3. 6% annual growth rate of industrial sector 4. The promotion of small scale business gave opportunities to those people who did not have the capital to start large firms to get business 5. protection from foreign sector enabled the development of indigenous industries in the area of electronics and automobile sector which otherwise could do have been developed

Question 33

drawbacks of trade and industrial sector

Answer 33

1. Inefficient functioning of public sector 2. excessive regulation of industries called "permit license raj" 3. no incentive to improve the quality of goods due to protection from foreign country

Question 34

features of agricultural sector

Answer 34

1. subsistence farming 2. high dependency on rainfall 3. low productivity 4. small land holdings 5. conflict between tenant and landlord 6. outdated technology 7. disguised unemployment

Question 35

policies for agriculture sector

Answer 35

1. land reforms 2. green revolution

Question 36

need for land reforms

Answer 36

In 1960s, the low productivity of agricultural sector.

Question 37

land reforms is divided to

Answer 37

1. abolition of intermediates 2. land ceiling

Question 38

abolition of intermediates

Answer 38

1. the abolition of intermediates meant that some 200 lakh tenants came into direct contact with government 2. the ownership conferred on tenants gave them incentive to increase output and the contribution to goth in agriculture.

Question 39

Land celling

Answer 39

fixing the maximum size of land which could be owned by an individual, beyond which it would be taken over by the government and would be allocated to landless and small farmers

Question 40

drawbacks of land celling

Answer 40

1. tenants were evaluated and the land owners claimed to be self- cultivators 2. delaying its implementation 3. only successful in Kerala and West Bengal

Question 41

green revolution

Answer 41

the large increase in the production of food green resulting from the use of high yielding verity (HYV) seeds especially weed and rice

Question 42

why was green revaluation implemented?

Answer 42

1. to break the stagnation in the agricultural during the colonial rule 2. to overcome shortage of food grain availability in the post independence period

Question 43

benefits of green revolution

Answer 43

1. self-reliance in food grain 2. creation of buffer stock of good grain 3. increase in market surplus and income of the farmers 4. decrease in the price of food grains

Question 44

disadvantages of green revolution

Answer 44

1. the use of HYV seeds are restricted to the more affluent states 2. the HYV seeds are prone to pest 3. Green revolution benefited the wheat growing region only 4. increased the disparities between small and big framers

Question 45

steps taken by the government to provide hyv seeds

Answer 45

1. provided subsidies on fertilisers and pesticides 2. research institution to provide information 3. loans at low rate to farmers

Question 46

arguments against subsidies for hyv seeds

Answer 46

1. wasteful consumption and over production 2. misappropriated benefits and inequalities 3. growing too much of one thing 4. messing with the market prices 5. fiscal burden 6. harming the environment

Question 47

arguments in favour of subsidies

Answer 47

1. helping rural areas 2. food for everyone 3. study money for framers 4. eliminating subsidies will violate the goal of equity