The New Economic Policy of liberalisation, privatisation and globalisation was adopted by India in:
- A.1981
- B.1991
- C.1995
- D.2001
Correct answer
Explanation
The correct answer is B, 1991. A severe balance of payments crisis, with foreign exchange reserves down to a few weeks of imports, forced the government to announce the New Economic Policy in July 1991. Industrial licensing was abolished for most industries, the list of industries reserved for the public sector was cut sharply, limits on foreign investment were relaxed, the rupee was devalued, and import tariffs were brought down in stages. The three strands are remembered by the initials LPG: liberalisation, privatisation and globalisation. Option A, 1981, is wrong, though some loosening of controls had begun in the nineteen eighties. Option C, 1995, is the year India joined the World Trade Organisation, which was a consequence of the reforms. Option D, 2001, is wrong; by then the reforms were a decade old.
Read the full article: Types of Economies: Capitalist, Socialist and Mixed
Practice Questions
View allIn a capitalist economy, what mainly decides which goods will be produced?
- A.A five year plan prepared by the state
- B.The price mechanism and the profit motive
- C.The decisions of a central bank
- D.Orders of the planning authority
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In a capitalist or market economy the means of production are privately owned and nobody issues orders about production.
Read the full explanation →The book An Inquiry into the Nature and Causes of the Wealth of Nations, which gave the idea of the invisible hand, was written by:
- A.Karl Marx
- B.Adam Smith
- C.J. M. Keynes
- D.David Ricardo
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The Scottish economist published the Wealth of Nations in 1776 and is called the father of economics; he argued that if each person pursues his own interest in a free market, an invisible hand guides the outcome to the good of society, which became the classic defence of capitalism and…
Read the full explanation →An economy in which the public sector and the private sector exist side by side is called:
- A.Capitalist economy
- B.Socialist economy
- C.Mixed economy
- D.Command economy
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In such an economy the state owns and runs the industries that need very large capital or serve strategic and social purposes, regulates the rest by law, and leaves ordinary production to private enterprise, while keeping responsibility for welfare and employment.
Read the full explanation →Das Kapital, one of the foundation texts of socialist economics, was written by:
- A.Friedrich Engels
- B.Karl Marx
- C.Robert Owen
- D.V. I. Lenin
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Marx published the first volume of Das Kapital in 1867; it analysed capital, surplus value and the exploitation of labour and became the basic text of what is called scientific socialism.
Read the full explanation →Which of the following is not one of the central problems of an economy?
- A.What to produce
- B.How to produce
- C.For whom to produce
- D.Who will rule the country
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Because resources are scarce and wants are unlimited, every economy must answer three questions, and these are called its central problems: what goods and in what quantity to produce, how to produce them, that is by which technique and combination of labour and capital, and for whom to produce, that…
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