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 industry is not part of the Index of Eight Core Industries?
[A] Electricity
[B] Crude Oil
[C] Natural Gas
[D] Pharmaceuticals
Show Answer
Correct Answer: D [Pharmaceuticals]
Notes:
The Index of Eight Core Industries includes Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement, and Electricity. Pharmaceuticals are not included in this index. The Index serves as an indicator for measuring the industrial performance in India, and is released monthly by the Ministry of Commerce and Industry since 2004.
2. Which economic law states “bad money drives out good money”?
[A] Wagner’s law
[B] Keynes’ law
[C] Grimm’s law
[D] Gresham’s law
Show Answer
Correct Answer: D [Gresham’s law]
Notes:
Gresham’s law, enunciated by Sir Thomas Gresham, states that inferior currency (bad money) in circulation displaces valuable or superior currency (good money) if both are accepted at same face value, as people hoard the good currency and spend the bad.
3. Which goods are consumed collectively by the community?
[A] Public Goods
[B] Consumer Goods
[C] Non-durable Goods
[D] Durable Goods
Show Answer
Correct Answer: A [Public Goods]
Notes:
Public goods are non-excludable and non-rivalrous commodities or services. They are made available to all members of society without direct payment. Examples include national defense, clean air, and street lighting. Governments usually fund public goods due to the free rider problem. Paul Samuelson formally defined public goods in 1954. Provision and maintenance typically rely on taxation and government administration.
4. In which situation does investment increase?
[A] Increase in output and increase in capital stock
[B] Decrease in output and increase in capital stock
[C] Increase in output and decrease in capital stock
[D] Decrease in output and decrease in capital stock
Show Answer
Correct Answer: A [Increase in output and increase in capital stock]
Notes:
Investment rises when both output and capital stock increase. According to investment theory, higher output raises firms’ desired capital stock, and greater actual capital stock often results from increased investment activity. The investment function states that investment depends positively on output levels. Firms expand productive capacity by investing when higher output raises desired capital stock beyond the existing level.
5. What is the relationship between ‘Dear money’ & ‘Cheap money’ in Economics Terminology?
[A] Both of the terms are synonyms
[B] Both of them are antonyms
[C] They are unrelated in terms of their meaning
[D] Dear Money is white Money , cheap money is black money
Show Answer
Correct Answer: B [Both of them are antonyms]
Notes:
Dear money is available at exceptionally high rate of interest and cheap money is available at very low rates
6. Which among the following is the main function of Agricultural Finance Corporation Limited ?
[A] consultancy services in the field of agriculture
[B] social service organization
[C] Agricultural commodities exchange
[D] Agricultural cooperative society
Show Answer
Correct Answer: A [consultancy services in the field of agriculture]
Notes:
Agricultural Finance Corporation Limited (AFC) is a development organization that provides consulting, advisory, and implementation support for agriculture and rural development in India. AFC was established in 1968 by India’s banking industry.
7. An investor or speculator who subscribes to a new issue with the intention of selling them soon after allotment to realize a quick profit is called?
[A] Stag
[B] Tall
[C] Bull
[D] Bear
Show Answer
Correct Answer: A [Stag]
Notes:
The term stag means a speculator who buys and sells stocks in short timeframes to make quick profits. The motove of stag is to make profit quickly on a fast moving trend, rather than buying and holding for the long run.
8. If a commodity has more number of substitutes, the demand for this commodity will be _______?
[A] more elastic
[B] less elastic
[C] inelastic
[D] perfectly elastic
Show Answer
Correct Answer: A [more elastic]
Notes:
Substitute goods are those goods which can be used in place of each other. Examples of substitute goods are : tea and coffee; ghee and edible oil. In case of substitute goods like tea and coffee, demand for a commodity falls with a fall in the price of other substitute goods.
9. Which bank coordinates the selling of State Development Loans (SDLs) in India?
[A] SBI
[B] IDBI
[C] Scheduled Commercial Banks
[D] RBI
Show Answer
Correct Answer: D [RBI]
Notes:
State Development Loans are debt instruments issued by state governments in India. The Reserve Bank of India acts as the agent for all state governments in managing and coordinating the auction and sale of SDLs. RBI notifies the details and conducts the actual sale process via electronic platforms regulated by it, ensuring efficient borrowing for states.
10. Consider the following:
- Minor Irrigation Scheme: CCA less than 2000 Hectares
- Medium Irrigation Scheme : CCA more than 2000 Hectares but less than 10000 Hectares
- Major Irrigation Scheme : CCA more than 10000 Hectares
Which among the above statements is / are correct?
[A] Only 1 and 2 are correct
[B] Only 2 and 3 are correct
[C] all are correct
[D] all are incorrect
Show Answer
Correct Answer: C [all are correct]
Notes:
Various irrigation schemes in India were classified by the erstwhile planning commission into three parts viz. Minor, Medium and Major Irrigation schemes.
- Major irrigation Scheme: Major irrigation schemes are those schemes which have a Culturable Command Areas of More than 10,000 hectares.
- Medium irrigation Schemes: The Medium Irrigation Schemes have a CCA of 2,000-10,000 hectares.
- Minor Schemes: Those with Culturable command areas up to 2000 hectares.
Cultural command area is the basis for the design of water course and basis for the design of an irrigation project. It is the proportion of the Gross Command Area which is Culturable and cultivable.
