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. What is the relationship between ‘Dear money’ & ‘Cheap money’ in Economics Terminology?
[A] Both of the terms are synonyms
[B] Both of them are antonyms
[C] They are unrelated in terms of their meaning
[D] Dear Money is white Money , cheap money is black money
Show Answer
Correct Answer: B [Both of them are antonyms]
Notes:
Dear money is available at exceptionally high rate of interest and cheap money is available at very low rates
2. Which of the following organizations provides Buffer Stock Financing Facility ?
[A] Reserve Bank of India
[B] Asian Development Bank
[C] International Monetary Fund
[D] World Bank
Show Answer
Correct Answer: C [International Monetary Fund]
Notes:
IMF in 1969 to provide financial assistance to members with a temporary balance of payments need arising from contributions to buffer stocks established under approved international commodity agreements
3. What happens to deposit rates if RBI tightens monetary policy?
[A] Deposit rates will decrease
[B] Deposit rates will remain unchanged
[C] Deposit rates will increase
[D] Rates may increase or decrease
Show Answer
Correct Answer: C [Deposit rates will increase]
Notes:
When the RBI tightens its policy by raising the repo rate, banks face higher borrowing costs from the RBI. Banks increase deposit rates to attract funds from the public. For example, the repo rate was increased multiple times in 2022 and banks responded by increasing fixed deposit rates between May and December 2022.
4. Which authority regulates violations in foreign currency convertible bonds in India?
[A] Securities and Exchange Board of India (SEBI)
[B] Reserve Bank of India (RBI)
[C] Foreign Investment Promotion Board (FIPB)
[D] Bombay Stock Exchange (BSE)
Show Answer
Correct Answer: B [Reserve Bank of India (RBI)]
Notes:
The Reserve Bank of India (RBI) regulates FCCBs under the External Commercial Borrowings (ECB) framework and the Foreign Exchange Management Act (FEMA). RBI issues guidelines on FCCBs, sets minimum maturity periods, and monitors compliance with foreign exchange regulations. SEBI regulates securities markets but does not regulate FCCB violations. FIPB was abolished in 2017. Bombay Stock Exchange acts as an exchange, not a regulator.
5. Which tool absorbs excess liquidity from banks most effectively?
[A] Repo Rate
[B] Cash Reserve Ratio (CRR)
[C] Prime Lending Rate
[D] Statutory Liquidity Ratio (SLR)
Show Answer
Correct Answer: B [Cash Reserve Ratio (CRR)]
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.
6. National Social Assistance programme was initially rolled out in which of the following five year plans?
[A] Fifth Five Year Plan
[B] Sixth Five Year Plan
[C] Seventh Five Year Plan
[D] Eighth Five Year Plan
Show Answer
Correct Answer: D [Eighth Five Year Plan]
Notes:
The National Social Assistance Programme was launched in 1995 during 8th five year plan as a Centrally Sponsored Scheme of the Government of India. The scheme provides financial assistance to the elderly, widows and persons with disabilities in the form of social pensions.
7. Who decides the interest rates on savings bank accounts in India?
[A] Central Government
[B] Banks themselves
[C] Reserve Bank of India
[D] Individual account holders
Show Answer
Correct Answer: B [Banks themselves]
Notes:
Banks in India have the authority to set savings bank account interest rates since May 2011. The Reserve Bank of India deregulated savings deposit rates in October 2011. Each bank decides its own rate, subject to RBI guidelines on calculation and credit of interest. RBI requires interest calculation on a daily basis. Rates are publicly notified by each bank.
8. Which among the following is the chief characteristic of the primary industry of the developed countries?
[A] Larger farm size and increasing corporate ownership of farms
[B] Larger farm size and more government ownership of farms
[C] Smaller farm size and a diversity of crops on each farm
[D] Smaller farm size and fewer family-owned farms
Show Answer
Correct Answer: A [Larger farm size and increasing corporate ownership of farms]
Notes:
Consider agriculture in the developed countries such as United States and Canada. There, the small family farms are not able to earn a profit and are being replaced by large corporate farms.
9. What is unlimited in an ‘unlimited company’ in India?
[A] Number of shares it can issue in market
[B] Liability of its members
[C] Amount of investment by its promoters
[D] All of the above
Show Answer
Correct Answer: B [Liability of its members]
Notes:
An unlimited company in India is defined under the Companies Act, 2013 as a company not having any limit on the liability of its members. Members of such a company are fully liable for all debts and liabilities incurred, without restriction. Unlimited companies are recognized under Indian company law but are rare in practice due to full personal liability.
10. Where are the Headquarters of New Development Bank situated?
[A] Manila (Philippines)
[B] Shanghai (China)
[C] New Delhi (India)
[D] Beijing (China)
Show Answer
Correct Answer: B [Shanghai (China)]
Notes:
The New Development Bank which is also known as BRICS Development Bank has its headquarters in Shanghai, China. It is multilateral development bank established by BRICS states (Brazil, Russia, India, China and South Africa).
