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. In September 1999, which organization established the Poverty Reduction and Growth Facility (PRGF) to make the objectives of poverty reduction and growth more central to lending operations in its poorest member countries?
[A] Asian Development Bank
[B] International Monetary Fund
[C] World Bank
[D] US Federal Bank
Show Answer
Correct Answer: B [International Monetary Fund]
Notes:
The Poverty Reduction and Growth Facility (PRGF) was set up by the International Monetary Fund in September 1999. Its objective was to formulate policies focusing on growth and poverty reduction.
2. Which among the following ratios correctly denotes Money Multiplier?
[A] M3: M0
[B] M1: M3
[C] M3: M1
[D] M1: M0
Show Answer
Correct Answer: A [M3: M0]
Notes:
Money multiplier is expressed as a ratio between broad money (M3) and Reserve money (M0). It refers to how an initial deposit can lead to a bigger final increase in the total money supply.
3. Which of the following are instruments of monetary policy?
- Bank Rate Policy
- Reserve Ratio Requirements
- Liquidity Adjustment Facility
- Open Market Operations
Select the correct option from the codes given below:
[A] Only 1, 2 & 3
[B] Only 2, 3 & 4
[C] Only 1, 2 & 4
[D] 1, 2, 3 & 4
Show Answer
Correct Answer: D [1, 2, 3 & 4]
Notes:
Bank Rate Policy, Reserve Ratio Requirements, Liquidity Adjustment Facility, and Open Market Operations are all principal monetary policy instruments used by central banks including RBI. They regulate money supply, liquidity, and interest rates in the economy. Each plays a specific role in achieving monetary stability and economic objectives as part of monetary policy operations.
4. Consider the following items with respect to the classification of “Total Food Grains” in India:
- Rice
- Wheat
- Coarse cereals (such as millet, barley, sorghum)
- Pulses (including lentils, chickpeas)
Which of the above are included in the definition of Total Food Grains by Indian agricultural standards?
[A] Only 1 and 2
[B] 1, 2, 3 and 4
[C] 1, 2 and 3
[D] 1, 2 and 4
Show Answer
Correct Answer: B [1, 2, 3 and 4]
Notes:
Total Food Grains, as classified by Indian agricultural authorities, comprise rice, wheat, all types of coarse cereals (millet, barley, sorghum, etc.), and pulses. These groups are reported together in agriculture statistics and policy documents, as both cereals and pulses are major staple food grains cultivated and consumed across India.
5. Which among the following coal producer of India is outside the Coal India Ltd?
[A] Southern Eastern Coalfields (Bilaspur)
[B] Bharat Coking Coal (Dhanbad)
[C] Mahanandi Coalfields (Sambalpur)
[D] Singerani Collieries Company (Telangana)
Show Answer
Correct Answer: D [Singerani Collieries Company (Telangana)]
Notes:
Singareni Collieries Company Limited (SCCL) is jointly owned by the Government of Telangana and Government of India on a 51:49 equity basis.
6. Consider the following statements regarding Cash Management Bills (CMBs):
- Cash Management Bills are short-term money market instruments with maturity less than 91 days.
- Cash Management Bills are issued at a discount to face value and redeemed at face value upon maturity.
- Cash Management Bills are issued by the Reserve Bank of India on behalf of the Central Government.
- Cash Management Bills follow a fixed, pre-determined issuance schedule like Treasury Bills.
Which of the above statements is / are correct?
[A] Only 1 and 2 are correct
[B] Only 1, 2, and 3 are correct
[C] All are correct
[D] Only 2 and 3 are correct
Show Answer
Correct Answer: B [Only 1, 2, and 3 are correct]
Notes:
Statements 1, 2, and 3 are correct. Cash Management Bills (CMBs) are short-term securities with maturities less than 91 days, issued at a discount and redeemed at face value, by the RBI on behalf of the Central Government. Statement 4 is incorrect; unlike Treasury Bills, CMBs are issued as per requirement, not on a fixed schedule, enabling flexible management of government cash flows.
7. The business transactions done in lieu of which of the following would be called Invisible Trade?
- Consulting
- Income from foreign investment
- Shipping services
- Tourism
Select the correct option from the codes given below:
[A] Only 1 & 2
[B] Only 2 & 3
[C] Only 3 & 4
[D] 1, 2, 3 & 4
Show Answer
Correct Answer: D [ 1, 2, 3 & 4 ]
Notes:
Business transactions that occur with no exchange of tangible goods called Invisible Trade. It involves the transfer of non-tangible goods and/or service, intellectual property and patents. Examples of invisible trade including consulting, income from foreign investment, shipping services and tourism.
8. When investors buy securities directly from the company issuing them, then it is termed as __:
[A] Follow on Public Offer
[B] Initial public offering
[C] Primary Market
[D] Secondary Market
Show Answer
Correct Answer: C [Primary Market ]
Notes:
C is the correct answer. In case of the primary market, investors buy securities directly from the company issuing them, while in the secondary market, investor’s trade securities among themselves. Thus, Primary market is for raising the Equity capital or share capital, which is the owners’ interest on the assets of the enterprise after deducting all its liabilities. This mechanism of buying and selling shares through stock exchange is known as the secondary markets.
9. Which type of foreign exchange rate system does India follow?
[A] Fixed
[B] Free float
[C] Managed float
[D] Fixed target band
Show Answer
Correct Answer: C [Managed float]
Notes:
India has a managed floating exchange rate system since 1994. The Reserve Bank of India intervenes in the foreign exchange market to reduce excessive volatility. The rupee exchange rate is mainly determined by market demand and supply. The system allows daily fluctuations, with the RBI entering the market when necessary to maintain orderly conditions.
10. SIDO is associated with which of the following industries?
[A] Small industry
[B] Iron industry
[C] Steel industry
[D] Soap industry
Show Answer
Correct Answer: A [Small industry]
Notes:
The Small Industries Development Organization (SIDO) is the national SME Development Agency of India. It is a major constituent of the Ministry of Small Scale Industries of the Government of India. It was Set up in 1954, SIDO provides services to small industry throughout the country by implementing a broad program of activities and services like Entrepreneurship Development, Tool Room Services, Testing Centres, Extension Services, R&D Services, etc.
