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 of the following statements is correct about the chairperson of Monetary Policy Committee (MPC)?
[A] The chairperson of the committee is appointed by the RBI Governor
[B] RBI Governor is the ex officio Chairperson of the committee
[C] Finance Minister is the ex-officio chairperson of the committee
[D] The Chairperson of the committee is appointed by the Finance Minister
Show Answer
Correct Answer: B [RBI Governor is the ex officio Chairperson of the committee]
Notes:
The Monetary Policy Committee consists of six Members. Three Members are from the RBI and the other three Members appointed by the Central Government. The Members appointed by the Central Government hold the office for a period of four years. The Governor of RBI is the ex-officio Chairperson of the committee.
2. 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.
3. Most Initial Public Offering (IPOs) are done by the companies which are ___________?
[A] Very small cottage industries
[B] Smaller, younger companies which need capital to expand their business.
[C] Large privately-owned companies
[D] Public Sector Companies
Show Answer
Correct Answer: B [Smaller, younger companies which need capital to expand their business.]
Notes:
Most Initial Public Offerings (IPOs) are conducted by smaller, younger companies seeking capital for growth. These companies often lack sufficient funds for expansion and view IPOs as a way to raise money from public investors. Historically, many successful tech firms, like Google and Facebook, started as small companies that went public to fuel their rapid growth. In contrast, large privately-owned companies may opt for private funding or mergers, while public sector companies typically do not engage in IPOs.
4. 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.
5. Which among the following correctly denotes the Primary Deficit?
[A] Revenue Expenditure – Revenue Receipts
[B] sum of the net increase in holdings of treasury bills of the RBI and its contributions to the market borrowing of the government.
[C] Budgetary Deficit + Govt. market borrowings and liabilities
[D] Fiscal Deficit – Interest Payments
Show Answer
Correct Answer: D [Fiscal Deficit – Interest Payments]
Notes:
The fiscal deficit may be decomposed into primary deficit and interest payment. The primary deficit is obtained by deducting interest payments from the fiscal deficit. Thus, primary deficit is equal to fiscal deficit less interest payments. It indicates the real position of the government finances as it excludes the interest burden of the loans taken in the past.
6. Which of the following places of the world is known for ‘Guano’, a uniquely-produced natural fertilizer which has a high concentration of nitrates?
[A] Tierra del Feugo
[B] Atacama desert
[C] Minas Gerais of Brazil
[D] Coastal headlands and Islands of Peru
Show Answer
Correct Answer: D [Coastal headlands and Islands of Peru]
Notes:
The word “guano” originates from the Quichua language of the Andes and means “the droppings of sea birds”. Andean peoples collected guano from the coast of Peru for use as soil enricher.
7. Which among the following bodies regulated the cooperative banks in India?
[A] Reserve Bank of India
[B] Small Industries Development Bank of India
[C] National Bank for Agriculture and Rural Development
[D] National Cooperative Union of India
Show Answer
Correct Answer: A [ Reserve Bank of India ]
Notes:
As per the Cooperative Societies Act, Reserve Bank of India (RBI) regulates the cooperative banks and these are governed by the Banking Regulations Act, 1949 and the Banking Laws (Cooperative Societies) Act, 1965.
8. Which among the following represents a fall in the prices?
- Stagflation
- Disinflation
- Deflation
Select the correct option from the codes given below:
[A] Only 1 & 2
[B] Only 2 & 3
[C] Only 3
[D] Only 2
Show Answer
Correct Answer: C [ Only 3 ]
Notes:
Stagflation, as you might know is a condition when economy isn’t growing but prices are. So, this option would be opted out. Next two are disinflation and deflation. Disinflation means rise in prices has slowed down significantly as compared with the previous year. This simply implies that prices don’t fall during disinflation also. Deflation is when the prices actually fall. Kindly note that deflation usually moves hand in hand with economic slowdown, lower productivity and loss of employments.
9. Which of the following industries is considered as “Mother of all industries”?
[A] Textile industry
[B] Coal industry
[C] Iron and steel industry
[D] Jute industry
Show Answer
Correct Answer: C [Iron and steel industry]
Notes:
The finished products of Iron and steel industries are used as raw material for other industries such as automobile and manufacturing industries. Iron and steel industry is called the mother of all industries because they need steel and iron for production, for machinery and for infrastructure.
10. In a centrally planned economy, who among the following plans all the important activities in the economy?
[A] Industrialists
[B] Citizens
[C] Judiciary
[D] Government
Show Answer
Correct Answer: D [Government]
Notes:
A centrally planned economy is an economic system in which the state or government makes economic decisions rather than the these being made by the interaction between consumers and businesses.
