Indian Economy MCQs

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.

Notes:
Urea is a white crystalline solid containing about 46% nitrogen. Urea is widely used as a fertilizer and animal feed additive in agriculture. No other solid fertilizer has a higher nitrogen content than urea. Ammonium nitrate contains about 34% nitrogen, calcium ammonium nitrate about 26%, and calcium nitrate about 15.5% nitrogen.

Notes:
Fiscal policy uses government taxation and spending to affect economic growth, employment, and inflation. Main tools are tax adjustments and expenditure management. These decisions are made through the government’s annual budget process. Fiscal policy is distinguished from monetary policy, which is implemented by central banks using instruments such as interest rates, reserve requirements, and open market operations.

Notes:
The RBI’s PCA framework mandates intervention if a bank records net NPA above 6%, capital adequacy ratio below 9%, or negative return on assets for four years. PCA restrictions include halting dividend payments and branch expansion. A leverage ratio above 25 times Tier 1 capital also triggers PCA. Leverage ratio measures a bank’s core capital relative to its total assets and exposure.

Notes:
The Reserve Bank of India uses the Cash Reserve Ratio under the Reserve Bank of India Act, 1934. CRR is the percentage of total deposits that banks must keep as reserves with RBI in cash only. An increase in CRR immediately reduces available funds for banks to lend. RBI reviews and announces CRR regularly in its monetary policy statements.

Notes:
Brazil, India, and Mexico have the highest outstanding IBRD loan commitments as per recent World Bank data. Brazil’s net IBRD commitments lead global figures. India was among the top recipients in 2023, borrowing over 4.3 billion U.S. dollars. Mexico also remains a principal IBRD borrower for infrastructure and development projects in recent years. These three countries routinely top IBRD debt statistics globally.

Notes:
Low liquidity in the economy reduces available funds for investment and lending. Reduced lending causes a drop in demand for assets such as stocks and real estate. Historical episodes, including the 2008 Global Financial Crisis, showed falling liquidity preceded asset price declines. Central bank policies that tighten liquidity often cause comparatively lower market activity and asset devaluation.

Notes:
Cost-push inflation arises from increases in production costs like wages and raw materials (statement 1). It cannot be controlled easily compared to demand-pull inflation (statement 2 is incorrect). Inflation reduces the purchasing power of money (statement 3). Supply shocks, e.g., rising oil prices, often trigger cost-push inflation (statement 4). Thus, 1, 3, and 4 are correct.

Notes:
Singareni Collieries Company Limited (SCCL) is jointly owned by the Government of Telangana and Government of India on a 51:49 equity basis.

Notes:
The Integrated Action Plan (IAP) is aimed at bridging the development deficit in the extremely backward areas that are affected by Left Wing Extremism.