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Tamilnadu Samacheer Kalvi 12th Commerce Solutions Chapter 20 Liberalization, Privatization and Globalization

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Samacheer Kalvi 12th Commerce Liberalization, Privatization and Globalization Textbook Exercise Questions and Answers

I. Choose the Correct Answer

Question 1.
_______ is the result of New Industrial Policy which abolished the ‘License System’
(a) Globalisation
(b) Privatisation
(c) Liberalisation
(d) None of these
Answer:
(c) Liberalisation

Question 2
_______ means permitting the private sector to setup industries which were previously reserved for public sector.
(a) Liberalisation
(b) Privatisation
(c) Globalisation
(d) Public Enterprise
Answer:
(b) Privatisation

Question 3
_______ ownership makes bold management decisions due to their strong foundation in
the international level.
(a) Private
(b) Public
(c) Corporate
(d) MNC’s
Answer:
(a) Private

Question 4.
_______ results from the removal of barriers between national economies to encourage the flow of goods, services, capital and labour.
(a) Privatisation
(b) Liberalisation
(c) Globalisation
(d) Foreign Trade
Answer:
(c) Globalisation

Question 5.
New Economic Policy was introduced in the year _______
(a) 1980
(b) 1991
(c) 2013
(d) 2015
Answer:
(b) 1991

II. Very Short Answer Questions

Question 1.
State the branches of New Economic Policy.
Answer:
There are three dimensions of New Economic Policy.
They are explained as:

  1. Liberalization
  2. Privatization
  3. Globalization

Question 2.
What is Privatisation?
Answer:
Privatization is the incidence or process of transferring ownership of a business enterprise, agency or public service from the government to the private sector.

Question 3.
Mention any three disadvantages of Liberalisation.
Answer:
Disadvantages of Liberalisation:

  1. Increase in unemployment
  2. Loss to domestic units
  3. Increased dependence on foreign nations
  4. Unbalanced development

Question 4.
Name the industries which are reserved for public sector.
Answer:
The number of industries reserved for public sector was reduced from 17 (as per 1956 policy) to only 8 industries viz, Arms and Ammunition, Atomic Energy, Coal and Lignite, Mineral oils, Mining of ores, Mining of copper, lead, zinc, etc., Minerals for atomic energy and Railways.

Question 5.
Give any three advantages of Globalisation.
Answer:
Advantages of Globalisation:

  1. Increase in foreign collaboration
  2. Expansion of market
  3. Technological development
  4. Reduction in brain drain

III. Short Answer Questions

Question 1.
What do you mean by Liberalisation?
Answer:
Liberalization refers to laws or rules being liberalized, or relaxed, by a government. Liberalizing trade policy by the government includes removal of tariff, subsidies and other restrictions on the flow of goods and services between countries. Liberalization is the result of New Industrial Policy which abolished the “License system” or “Licence Raj”.

Question 2.
Explain the concept of Privatisation.
Answer:
Privatisation means permitting the private sector to set up industries which were previously reserved for the public sector. Under this policy many Public Sector Units (PSUs) were sold to private sector. The main reason for privatisation was that PSUs were running in losses due to mismanagement and political interference.

Question 3.
What are advantages of disinvestment?
Answer:
Disinvestment in PSUs: The Govt, has started the process of disinvestment in those PSUs which had been running into loss. It means that Govt, has been selling out these industries to private sector. So disinvestment is a system of privatizing government enterprises.

Question 4.
State any three impacts on Globalisation.
Answer:
Impact of Globalization:

  1. Corporations got a competitive advantage from lower operating costs, and access to new raw materials and additional markets.
  2. Multinational corporations (MNCs) can manufacture, buy and sell goods worldwide.
  3. Globalisation has led to a boom in consumer products market.

Question 5.
Write a short note on New Economic Policy.
Answer:
India agreed to the conditions of World Bank and IMF and announced New Economic Policy (NEP) which consists of wide range of economic reforms. This new set of economic reforms is commonly known as the LPG or Liberalisation, Privatisation and Globalisation model.

IV. Long Answer Questions

Question 1.
Explain the advantages and disadvantages of liberalisation.
Answer:
Liberalisation means relaxation of various government restrictions in the areas of social and economic policies of the country.
Advantages of Liberalisation:

  1. Increase in foreign investment: If a country liberalises its trade, it will make the country – more attractive for inward investment.
  2. Increase the foreign exchange reserve: Relaxation in the regulations covering foreign investmefit and foreign exchange has paved way for easy access to foreign capital.
  3. Increase in consumption: Liberalization increases the number of goods available for consumption within a country

Disadvantages of Liberalisation:

  1. Increase in unemployment: Due to liberalisation some industries grow, some decline. Therefore, there may be unemployment from certain industries closing.
  2. Increased dependence on foreign nations: Trade liberalisation means firms will face greater competition from abroad.
  3. Unbalanced development: Trade liberalisation may be damaging for developing economies. which cannot compete against free trade.

Question 2.
Explain the impact of LPG on Indian Economy.
Answer:
Impact of Liberalisation:

  1. Liberalization has opened up new business opportunities abroad and increased foreign direct investment.
  2. New market for various goods came into existence and resulted not only in urban but also in rural development.
  3. It became very easy to obtain loans from banks for business expansion.

Impact of Privatisation:

  1. Privatization has a positive impact on the financial growth by decreasing the deficits and debts.
  2. Increase in the efficiency of government undertakings.
  3. Provide better goods and services to the consumers.

Impact of Globalization:

  1. Multinational corporations can manufacture, buy and sell goods worldwide.
  2. Globalisation has led to a boom in consumer products market.
  3. The advent of foreign companies and growth in economy has led to job creation.

Samacheer Kalvi 12th Commerce Liberalization, Privatization and Globalization Additional Questions and Answers

I. Choose the Correct Answer

Question 1.
It is a situation in which a country loses its most educated and talented workers to other countries is known as
(a) Liberalisation
(b) Foreign trade
(c) Brain Drain
(d) Nationalisation
Answer:
(c) Brain Drain

Question 2
is the latest outcome of liberalisation.
(a) Privatisation
(b) Globalisation
(c) Foreign collaboration
(d) None of these
Answer:
(c) Foreign collaboration

Question 3.
refers to laws or rules being liberalised or relaxed by a government.
(a) Liberalisation
(b) Privatisation
(c) Nationalisation
(d) Foreign Collaboration
Answer:
(a) Liberalisation

II. Very Short Answer Questions

Question 1.
What do you mean by Globalisation?
Answer:
Globalisation means the interaction and integrati on of the domestic economy with the rest of the world with regard to foreign investment, trade and production.

Question 2.
What are the forms of Globalisation?
Answer:
Forms of Globalization:
(a) Foreign trade policy
(b) Export promotion
(c) Freedom to repatriate
(d) Reduction in tariffs
(e) Encouraging open competition

III. Short Answer Questions

Question 1.
Explain the highlights of LPG policy.
Answer:
The salient highlights of the Liberalisation, Privatisation and Globalisation Policy in India:

  1. Introduction of New Foreign Trade Agreements
  2. Foreign Investment (FDI and FII)
  3. MRTP Act, 1969 (Amended)
  4. Deregulation
  5. Opportunities for overseas trade
  6. Tax reforms
  7. Abolition of License

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