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. Export of which of the following is an Invisible Export?
[A] Services
[B] Prohibited goods
[C] Unrecorded goods
[D] Goods through smuggling
Show Answer
Correct Answer: A [ Services ]
Notes:
Any export that does not have a tangible physical presence (e.g. expertise, insurance underwriting). Here, Invisible Export means export of Services
2. Which among the following are called “Breton Wood Twins”?
[A] IBRD & IMF
[B] IDA & IFC
[C] IDA & MIGA
[D] IMF & IDA
Show Answer
Correct Answer: A [IBRD & IMF]
Notes:
The planners at Breton Woods established the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), which today is part of the World Bank Group
3. In which of the five year plan in India, the concept of Financial Inclusion was included for the first time?
[A] 8th Five Year Plan
[B] 9th Five Year Plan
[C] 10th Five Year Plan
[D] 11th Five Year Plan
Show Answer
Correct Answer: D [11th Five Year Plan]
Notes:
The 11th Five Year Plan was implemented from 2007-2012, when Manmohan Sigh was India’s Prime Minster. The main slogan for the 11th FYP was “Faster and more inclusive growth”. The 11th FYP made special emphasis on Financial Inclusion, poverty reduction, empowerment through education and skill development etc.
4. The Laffer curve is the graphical representation of :
[A] The relationship between tax rates and absolute revenue these rates generate for the government.
[B] The inverse relationship between the rate of unemployment and the rate of inflation in an economy.
[C] The inequality in income distribution
[D] The relationship between environmental quality and economic development.
Show Answer
Correct Answer: A [The relationship between tax rates and absolute revenue these rates generate for the government.]
Notes:
In economics, the Laffer curve is a hypothetical representation of the relationship between government revenue raised by taxation and all possible rates of taxation. It is used to illustrate the concept of taxable income elasticity – that taxable income will change in response to changes in the rate of taxation.
5. In what form do banks maintain the Cash Reserve Ratio (CRR)?
[A] Government Securities
[B] Physical Cash in Hand
[C] Deposits with the Reserve Bank of India
[D] A Combination of Cash and Government Securities
Show Answer
Correct Answer: C [Deposits with the Reserve Bank of India]
Notes:
The Reserve Bank of India requires commercial banks to maintain CRR exclusively as deposits with the RBI. The CRR rate is announced by RBI’s monetary policy. As of June 2024, the CRR for Indian banks is 4.5% of Net Demand and Time Liabilities. No interest is paid by RBI on the CRR amount held. Government securities are held under SLR, not CRR.
6. Which scenario best describes a Goldilocks economy?
[A] High inflation, High economic growth
[B] Low inflation, High economic growth
[C] Low inflation, Steady economic growth
[D] High inflation, Low economic growth
Show Answer
Correct Answer: C [Low inflation, Steady economic growth]
Notes:
A Goldilocks economy signifies a balance of low inflation and steady growth, avoiding extremes. The term is widely used in macroeconomics to represent optimal conditions for policy makers. It is named after the fairy tale character Goldilocks, indicating “just right” economic conditions.
7. The act of simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms is called _?
[A] Arbitrage
[B] Spot market
[C] Ambush marketing
[D] Futures market
Show Answer
Correct Answer: A [ Arbitrage ]
Notes:
Arbitrage is the process of simultaneous buying and selling of an asset from different platforms, exchanges or locations to cash in on the price difference. While getting into an arbitrage trade, the quantity of the underlying asset bought and sold should be the same. Only the price difference is captured as the net pay-off from the trade.
8.
If a company declares a 100% dividend, the shareholder will get an amount equal to the ___
[A]
Face Value of the Share
[B]
Market Value of the Share
[C]
Previous dividend announced
[D]
Face Value or Market Value, whichever is higher
Show Answer
Correct Answer: A [
Face Value of the Share
]
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. So if your company declares a 100% dividend, you will get an amount equal to the face value of the share and not equal to its market price. When dividend is expressed in percentage terms, it is the face value that is referred to. The same holds good when it comes to dividends declared by mutual funds — it is the par value of units that is considered — which usually stands at Rs 10.
9. Which is the longest irrigation canal in India?
[A] East Kosi Canal
[B] Sir hind Canal
[C] Yamuna Canal
[D] Indira Gandhi Canal
Show Answer
Correct Answer: D [Indira Gandhi Canal]
Notes:
The Indira Gandhi Canal is the longest irrigation canal of India. It starts from the Harike Barrage at Harike, a few kilometers below the confluence of the Satluj and Beas rivers in the Indian state of Punjab and terminates in irrigation facilities in the Thar Desert in the north west of Rajasthan state.
10. Courier service comes under which of the following sectors?
[A] Primary
[B] Secondary
[C] Both Secondary and Tertiary
[D] Tertiary
Show Answer
Correct Answer: D [Tertiary]
Notes:
The tertiary industry is the segment of the economy that provides services to its consumers, including a wide range of businesses such as financial institutions, schools and restaurants. It is also known as the tertiary sector or service industry/sector.
