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 the largest nuclear power station of India by capacity?
[A] Tarapur
[B] Kaiga
[C] Kakrapar
[D] Kudankulam
Show Answer
Correct Answer: D [Kudankulam]
Notes:
Kudankulam Nuclear Power Plant in Tamil Nadu is the highest-capacity nuclear plant in India, with a total of 2,000 MW currently installed with a further 2,000 MW under construction.
2. Which among the following is a correct definition of Fiduciary Issue of notes?
[A] The issue of currency notes without metallic backing
[B] The issue of currency notes with metallic backing
[C] The issue of currency notes with partial metallic backing
[D] The issue of currency notes with proportional metallic backing
Show Answer
Correct Answer: A [The issue of currency notes without metallic backing]
Notes:
The fiduciary issue is the part of the issue of notes and coins that is not backed by gold. All notes are Fiduciary today.
3. Approval of which among the following authorities alone would be sufficient to draw funds from Consolidated Fund of India ?
[A] Only Parliament
[B] Only President
[C] Either Parliament or President
[D] Both Parliament and President
Show Answer
Correct Answer: A [Only Parliament]
Notes:
No money can be appropriated (issued or drawn) out of Consolidated fund of India except in accordance with a parliamentary law.
4. Which among the following is the main feature of Democratic planning?
[A] Inducement
[B] Government
[C] Direction
[D] Flexibility
Show Answer
Correct Answer: D [Flexibility]
Notes:
Democratic planning is the planning process generally adopted in mixed economy. Mixed economy possesses characteristics of both capitalist economy as well as socialist economy. Democratic planning involves participation of all the citizens of an economy directly or indirectly.
5. Which among the following is used for a situation of “Too much money chasing too few goods?
[A] Demand Pull Inflation
[B] Cost pull inflation
[C] Stagflation
[D] Hyperinflation
Show Answer
Correct Answer: A [Demand Pull Inflation]
Notes:
Demand-pull inflation refers to the inflation from rapid growth in aggregate demand and when excess demand causes ‘too much money chasing too few goods.’ This generally happens when an economy is growing at a faster rate.
6. The portion of profits that a company distributes among its shareholders in the form of cash is usually known as _____?
[A] Yield
[B] Dividend
[C] Stock Split
[D] Free Float
Show Answer
Correct Answer: B [Dividend]
Notes:
Dividend is the portion of profits that a company distributes among its shareholders in the form of cash. Usually it is expressed per share. In some cases it is expressed as a percentage of the share`s face value. Dividend Yield is the ratio of dividend amount per share to the prevailing market price of the share is a yardstick to identify attractively-valued stocks. Other things remaining equal, the higher the dividend yield, more attractive is the stock for investors
7. Which among the following is the most reasonable idea behind issuing the “sweat equity” by the companies now a days?
[A] To provide more profits to the retail investors
[B] To provide more profits to the corporate investors
[C] To retain the best employees
[D] To save tax
Show Answer
Correct Answer: C [To retain the best employees]
Notes:
Sweat equity refers to the ownership stake given to employees in exchange for their hard work and contributions, rather than cash. Companies issue sweat equity primarily to retain top talent, incentivizing them to stay and perform well. This practice aligns employee interests with company success, fostering loyalty and motivation. Notably, companies like Google and Facebook have utilized sweat equity to attract and retain skilled employees, enhancing innovation and productivity.
8. Consider the following:
- Reverse Repo Rate
- Cash Reserve Ratio
- Statutory Liquidity Ratio
- Bank Rate
An increase in which among the above could raise the interest rates in the market?
[A] 1
[B] 1 & 2
[C] 1, 2 & 3
[D] 1, 2, 3 & 4
Show Answer
Correct Answer: D [1, 2, 3 & 4]
Notes:
The Reserve Bank uses various policy levers, such as repo rate, reverse repo rate, cash reserve ratio, statutory liquidity ratio and bank rate, to influence the amount of money in the market. An increase in any one of these could raise the interest rates.
9. There are some stocks in the stock market which by nature are low-priced, speculative and risky because of their limited liquidity, following and disclosure. What do we call these stocks?
[A] Green Stock
[B] Penny Stock
[C] Concentrated Stock
[D] Microcap stock
Show Answer
Correct Answer: B [Penny Stock]
Notes:
The correct answer is “Penny Stock.” Penny stocks are typically low-priced shares, often trading for less than $5, and are known for their high volatility and risk due to limited liquidity and less regulatory oversight. They are often associated with smaller companies and can be subject to important price manipulation. The term “penny stock” originated from the fact that these stocks were once traded for just a few cents.
10. The basic WTO principle with reference to trade barriers is that:
[A] Trade barriers can be imposed by any country that believes it will benefit from such trade barriers
[B] Trade Barriers should be lowered equally and without discrimination for all member countries
[C] Trade Barriers can be imposed if a majority of the members of the WTO agree
[D] Trade Barriers should be the same in all member countries so that the result is equivalent to free trade
Show Answer
Correct Answer: B [ Trade Barriers should be lowered equally and without discrimination for all member countries ]
Notes:
The correct answer is that trade barriers should be lowered equally and without discrimination for all member countries. This principle is rooted in the Most-Favored-Nation (MFN) clause of the World Trade Organization (WTO), which mandates that any favorable trading terms offered to one member must be extended to all members. This aims to promote fair competition and prevent trade discrimination, fostering a more open and equitable global trading system. The WTO, established in 1995, has 164 member countries, emphasizing the importance of non-discriminatory trade practices.
