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 is considered to be the best measure of an increase in a country’s economic efficiency?
[A] Increase in annual private investment
[B] Increase in real national income
[C] Increase in real per capita income
[D] Increase in net annual investment
Show Answer
Correct Answer: C [Increase in real per capita income]
Notes:
Per capita income is a measure of the average income earned per person in a given area (usually in a country) in a particular year. When this figure is adjusted for inflation, the real per capita income is obtained, which gives the best measure of an increase in a country’s economic efficiency.
2. Which of the following statements best describes a progressive tax system?
[A] The tax rate decreases as the taxable amount increases
[B] The tax rate stays the same regardless of the taxable amount
[C] The tax rate increases as the taxable amount increases
[D] The tax rate is randomly determined
Show Answer
Correct Answer: C [The tax rate increases as the taxable amount increases]
Notes:
In a progressive tax system, higher income earners pay a higher tax rate compared to those who earn less. This is based on the assumption that individuals who earn more have the ability and the capacity to pay more taxes. Most income tax systems in the world are progressive, including the United States, Canada, and the United Kingdom.
3. Which among the following is a major qualitative control measure in India ?
[A] Bank Rate Policy
[B] Open market Operations
[C] ways and means advances
[D] Margin Requirements
Show Answer
Correct Answer: D [Margin Requirements]
Notes:
Qualitative or selective methods of credit control refers to those methods which limit the nature or variety of money supply rather than its quantity. Such methods include regulation of margin requirement, credit rationing, regulation of consumer credit and direct action.
4. Which among the following are TOP 3 debtors of World Bank ?
[A] India, South Africa, Mexico
[B] India, Mexico, South Africa
[C] India, Mexico, Pakistan
[D] Mexico, India, South Africa
Show Answer
Correct Answer: B [India, Mexico, South Africa]
Notes:
The correct answer is “India, Mexico, South Africa.” As of recent data, India is one of the largest borrowers from the World Bank, primarily for development projects. Mexico also has important loans for infrastructure and social programs. South Africa has received funding for various initiatives, including poverty alleviation and economic development. The World Bank’s lending is aimed at reducing poverty and promoting sustainable development in these countries.
5. Consider the following:
- Allotting of the shares of net proceeds of taxes
- Laying down principles governing grants in aid
- Looking into the financial relations between the central government and the state Governments
The above mentioned functions are carried out by which among the following?
[A] Cabinet Committee on Economic Affairs
[B] National Development Council
[C] Finance Commission
[D] NITI Aayog
Show Answer
Correct Answer: C [Finance Commission]
Notes:
The correct answer is the Finance Commission. The Finance Commission is a constitutional body established under Article 280 of the Indian Constitution. Its primary role is to recommend the distribution of tax revenues between the central and state governments, ensuring fiscal federalism. It also lays down principles for grants-in-aid to states, addressing financial relations between different levels of government. The Finance Commission is constituted every five years, and its recommendations are crucial for maintaining balanced economic development across states.
6. In which among the following types comes the Interest Rate Risk?
[A] Credit risk
[B] Market risk
[C] Operational risk
[D] All the above categories
Show Answer
Correct Answer: B [Market risk]
Notes:
Interest Rate Risk falls under Market Risk. Market risk encompasses the potential for financial loss due to fluctuations in market prices, including interest rates. Interest rate changes can affect the value of investments, particularly fixed-income securities. For example, when interest rates rise, the prices of existing bonds typically fall, leading to potential losses for investors. This risk is a critical consideration for financial institutions and investors alike.
7. A Non-Resident Indian wants to get approval under Government Route for FDI in ‘Single Brand’ product retailing in India. Which among the following would be the appropriate agency to approach for this application?
[A] Regional Office of Reserve Bank of India
[B] Head Office of Reserve Bank of India
[C] Department of Economic Affairs (Ministry of Finance)
[D] Department of Industrial Policy and Promotion (Ministry of Commerce)
Show Answer
Correct Answer: D [Department of Industrial Policy and Promotion (Ministry of Commerce)]
Notes:
The correct agency to approach for FDI approval in ‘Single Brand’ retailing in India is the Department of Industrial Policy and Promotion (DIPP), now part of the Ministry of Commerce and Industry. This department is responsible for formulating and implementing policies related to foreign direct investment, including approvals for single brand retail, which allows foreign companies to operate retail stores in India under a single brand. The DIPP ensures compliance with the Foreign Exchange Management Act (FEMA) and other regulations.
8. Which of the following organizations has divided the countries into IDA, IBRD, and Blend countries for eligibility of loans?
[A] International Monetary Fund
[B] World Bank
[C] Asian Development Bank
[D] New Development Bank
Show Answer
Correct Answer: B [ World Bank ]
Notes:
Economies are divided into IDA, IBRD, and Blend countries based on the operational policies of the World Bank. International Development Association (IDA) countries are those with low per capita incomes that lack the financial ability to borrow from the International Bank for Reconstruction and Development (IBRD). Blend countries are eligible for IDA loans but are also eligible for IBRD loans because they are financially creditworthy.
9. The Integrated Child Development Services (ICDS) Scheme aims to improve the nutritional and health status of children in the age-group of _?
[A] 0-6 years
[B] 0-10 years
[C] 0-14 years
[D] 6-14 years
Show Answer
Correct Answer: A [0-6 years]
Notes:
The ICDS Scheme offers a package of six services, viz. Supplementary Nutrition; Pre-school non-formal education; Nutrition & health education; Immunization; Health check-up and Referral services. This programme was launched on 2nd October, 1975, as one of the flagship programmes of the Government of India and represents one of the world’s largest and unique programmes for early childhood care and development. The Integrated Child Development Services (ICDS) Scheme is a centrally sponsored Scheme implemented by States/UTs across the country.
10. Which of the following is not a Semi Luxury Tourist Train in India?
[A] Heritage Circuit
[B] Tiger Express
[C] Desert Circuit
[D] The Golden Chariot
Show Answer
Correct Answer: D [The Golden Chariot]
Notes:
Tiger Express is a semi-luxury train in India. It has been started in collaboration between the Railways and Indian Railway Catering and Tourism Corporation (IRCTC). It will take the tourist from travellers to the world-famous Bandhavgarh and Kanha National Parks in Madhya Pradesh. Desert Circuit and Heritage Circuit are two other semi-luxury tourist trains. The Golden Chariot is a luxury tourist train that connects the important tourist spots in the Indian states of Karnataka, Goa, Kerala, and Tamil Nadu & Pondicherry. It is named after the Stone Chariot in the Vitthala Temple at Hampi.
