Exercise 1

Assertion (A): An important policy instrument of economic liberalisation is reduction in import duties on capital goods.

Reason (R): Reduction in import duties would help the local entrepreneurs to improve technology to face the global markets.

In the context of the above two statements, which one of the following is correct?

Assertion (A): The emergence of economic globalism does not imply the decline of socialist ideology.

Reason (R): The ideology of socialism believes in Universalism and globalism.

Assertion (A): Devaluation of a currency may promote export.

Reason (R): Price of the country's products in the international market may fall due to devaluation.

Assertion (A): Fiscal deficit is greater than budgetary deficit.

Reason (R): Fiscal deficit is the borrowing from the Reserve Bank of India plus other liabilities of Government to meet it’s expenditure.

Assertion (A): During the year 2001-02, the value of India's total exports declined, registering a negative growth of 2.17%.

Reason (R):  During the year 2001-02, negative growth in exports was witnessed in respect of iron and steel, coffee, textiles and marine products.

Assertion (A): The new EXIM policy is liberal, market-oriented and favours global trade.

Reason (R): GATT has played a significant role in the liberalisation of the economy.

Assertion (A): For the first time, India had no trade deficit in the year 2002-03.

Reason (R): For the first time, India's exports crossed worth$ 50 billion in the year 2002-03.

Assertion (A): Balance of Payments represents a better picture of a country economic transactions with the rest of the world than the Balance of Trade.

Reason (R): Balance of Payments takes into account  the exchange of both visible and invisible items whereas balance  of trade does not.