Indian Economy MCQs
Indian Economy Multiple Choice Questions (MCQs) for SSC, State and all One Day Examinations of India. Objective Questions on Indian Economy for competitive examinations.
1. Which among the following organizations calculates and publishes LIBOR (London Interbank Offered Rate)?
[A] Bank of England
[B] Thomson Reuters
[C] European Banking Federation
[D] European Central Bank
Show Answer
Correct Answer: B [Thomson Reuters]
Notes:
The London Inter-bank Offered Rate (LIBOR) is the average interest-rate calculated from estimates submitted by the leading banks in London. The rates are calculated and published by Thomson Reuters Corporation.
2. Trombay, Nangal & Sindri are famous for which of the following?
[A] Iron
[B] Coal
[C] Fertillizers
[D] seeds
Show Answer
Correct Answer: C [Fertillizers]
Notes:
Trombay, Nangal, and Sindri are famous for fertilizers. The first fertilizer plant was established in Sindri, Jharkhand. Fertilizers are materials that are applied to soil or plant tissue to provide nutrients for plant growth. They can be natural or synthetic in origin. Trombay is located in Maharashtra. Nangal is a town in Punjab, India. Sindri is a neighborhood in Dhanbad, Jharkhand.
3. Euribor is a term associated with which of the following?
[A] An International Financial Company
[B] An association of European Financial Service providers
[C] A reference rate for Euro Money Market
[D] A credit rating agency of Europe
Show Answer
Correct Answer: C [A reference rate for Euro Money Market]
Notes:
Euribor (Euro Interbank Offered Rate )is similar to LIBOR (London Interbank Offer rate)
4. If the people prefer to keep cash with them rather than deposits, which among the following impacts will be seen on the Money Supply of the country?
[A] The money supply of the country will increase
[B] The money supply of the country will decrease
[C] The money supply of the country will not change
[D] The money supply of the country may increase or decrease
Show Answer
Correct Answer: B [The money supply of the country will decrease]
Notes:
If people prefer to keep cash with them rather than making deposits in banks, the impact on the Money Supply of the country will be as follows:
[B] The money supply of the country will decrease.
The reason for this is that money supply is typically categorized into different measures, with M1 and M2 being common examples. M1 includes currency (physical cash) in circulation and demand deposits (checking accounts). When people hold more cash and make fewer deposits, it reduces the amount of money in demand deposits, which are considered a part of the money supply. Therefore, if people choose to keep more cash on hand, it reduces the overall money supply in the country, leading to a decrease.
5. Which of the following Government gets the stamp duty collected on promissory notes?
[A] State Government 100%
[B] Central Government 100 %
[C] State Government 50% and Central Government 50%
[D] State Government 25% and Central Government 75%
Show Answer
Correct Answer: A [State Government 100%]
Notes:
The correct answer is “State Government 100%.” In India, stamp duty on promissory notes is governed by the Stamp Act of 1899, which allows state governments to levy stamp duty. Each state has the authority to set its own rates, and the revenue collected from stamp duty is retained entirely by the state government. This is a important source of revenue for states, contributing to their financial resources for development and public services.
6. What are the General Anti-Avoidance Rules?
[A] GAAR is a set of rules aimed at curbing aggressive tax planning
[B] GAAR is a set of rules aimed at curbing money laundering by Indians to Foreign countries
[C] GAAR is a set of rules aimed at regulating investments by Indians in foreign Countries
[D] GAAR is a set of rules aimed at regulating investments by Foreigners in India
Show Answer
Correct Answer: A [GAAR is a set of rules aimed at curbing aggressive tax planning]
Notes:
General Anti-Avoidance Rule or GAAR is a broad set of rules aimed at curbing aggressive tax planning. These rules will empower tax authorities to disregard any arrangement if its main purpose is to obtain tax benefit. The arrangement as a whole or in part may be disregarded and tax benefit denied.
7. Which of the following is used to denote broad money?
[A] M1
[B] M2
[C] M3
[D] M4
Show Answer
Correct Answer: C [M3]
Notes:
Narrow Money M1 = Currency with the public + Demand Deposits of public in Banks When a third component viz. Post office Savings Deposits is also added to M1, it becomes M2. M2 = M1 + Post Office Savings.
Broad Money M3 = Narrow money + Time Deposits of public with banks
8. What is IPO in context to a company?
[A] The first sale of stock by a private company to the public
[B] Upgradation of shares from primary to secondary market
[C] Selling of shares at premium by a company
[D] Convert of a private limited company to public limited Company
Show Answer
Correct Answer: A [ The first sale of stock by a private company to the public ]
Notes:
When an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to the public, it is called Initial Public Offering or IPO. In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), the best offering price and the time to bring it to market.
9. With reference to the financial markets, the Interval Funds are those fund which __:
[A] provide capital appreciation over the medium to long-term
[B] invest half of money in stock market and half in commodity market
[C] combine the features of open-ended and close-ended schemes
[D] provide both growth and regular income
Show Answer
Correct Answer: C [ combine the features of open-ended and close-ended schemes ]
Notes:
Interval funds combine the features of open-ended and close-ended schemes. Theyare open for sale or redemption during pre-determined intervals at NAV related prices.
10. At which rate, Reserve Bank of India borrows money from commercial banks?
[A] Bank Rate
[B] Repo Rate
[C] Reverse Repo Rate
[D] Statutory Liquidity Rate
Show Answer
Correct Answer: C [Reverse Repo Rate]
Notes:
Reverse repo rate is the rate at which the central bank of a country (Reserve Bank of India in case of India) borrows money from commercial banks within the country. It is a monetary policy instrument which can be used to control the money supply in the country.
