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. Bank Rate is defined as the rate at which:
[A] RBI lends short term loans to commercial banks
[B] a commercial bank can lend to its customers
[C] RBI lends long term loans to commercial banks
[D] the commercial banks are able to borrow overnight funds from RBI
Show Answer
Correct Answer: C [RBI lends long term loans to commercial banks ]
Notes:
Bank rate is the rate of interest which a central bank charges on the long term loans and advances that it extends to commercial banks and other financial intermediaries.
2. Which of the following currencies is not included in the Special Drawing Rights (SDR) Currency Basket?
[A] Indian Rupee
[B] British Pound
[C] Japanese Yen
[D] Chinese Renminbi
Show Answer
Correct Answer: A [Indian Rupee]
Notes:
The SDR basket now consists of the following five currencies: U.S. dollar 41.73%, Euro 30.93%, Renminbi (Chinese Yuan) 10.92%, Japanese Yen (8.33%), British Pound (8.09%).
3. 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.
4. Which among the following correctly denotes Reserve Money?
[A] Currency in circulation
[B] Currency in Circulation + Other deposits of the General Public with RBI
[C] Currency in circulation + Other deposits of the general Public with RBI + Cash held with the banks
[D] Currency in circulation + Other deposits of the general Public with RBI + Cash held with the banks + Banker’s Deposits with RBI
Show Answer
Correct Answer: D [Currency in circulation + Other deposits of the general Public with RBI + Cash held with the banks + Banker’s Deposits with RBI]
Notes:
Reserve money is also called High Powered Money / central bank money. It is the Currency in Circulation plus Deposits of Commercial Banks with RBI.
5. Which of the following is a suitable term for steady rise in the general level of prices, income, output and employment?
[A] Boom
[B] Recession
[C] Depression
[D] Recovery
Show Answer
Correct Answer: D [Recovery]
Notes:
The phase that is commonly used to describe a steady rise in the general level of prices, income, output, and employment is economic recovery.
6. Which among the following taxes is levied by state government only?
[A] Wealth Tax
[B] Estate Duty
[C] Corporation tax
[D] Entertainment Tax
Show Answer
Correct Answer: D [Entertainment Tax]
Notes:
Entertainment tax is levied by state government only. Now it has been subsumed under Goods and Service Tax by 101st Amendment to the Indian Constitution.
7. Expenditures of the central government on flagship development programmes comes under which of the following?
[A] Plan expenditures
[B] Non Plan expenditures
[C] Revenue expenditures
[D] Capital expenditures
Show Answer
Correct Answer: A [Plan expenditures]
Notes:
Plan expenditures refer to the money that is spent by a government or other organization on specific plans or projects. These plans or projects are typically designed to achieve specific goals or objectives, and the plan expenditures are used to fund the activities and operations associated with implementing those plans.
8. Trombay, Nangal & Sindri are famous for which of the following?
[A] Iron
[B] Coal
[C] Fertillizers
[D] seeds
Show Answer
Correct Answer: C [Fertillizers]
Notes:
Trombay, Nangal, and Sindri are famous for fertilizers. The first fertilizer plant was established in Sindri, Jharkhand. Fertilizers are materials that are applied to soil or plant tissue to provide nutrients for plant growth. They can be natural or synthetic in origin. Trombay is located in Maharashtra. Nangal is a town in Punjab, India. Sindri is a neighborhood in Dhanbad, Jharkhand.
9. Pump priming mainly deals with which of the following?
[A] Increased government expenditure during recession
[B] Decreased government expenditure during recession
[C] Increased government income during recession
[D] Decreased government income during recession
Show Answer
Correct Answer: A [Increased government expenditure during recession]
Notes:
Pump priming refers to the collective measures taken by the governments during recession to simulate the economy during recession. This is done usually by cutting the taxes and increased public spending.
10. Which among the following is referred to as the “Soft Loan Window” of the World Bank?
[A] International Monetary Fund
[B] International Finance Corporation
[C] International Development Association
[D] World Trade Organization
Show Answer
Correct Answer: C [International Development Association]
Notes:
The “Soft Loan Window” of the World Bank is commonly referred to as the International Development Association (IDA). It was founded in 1960 and provides low or zero-interest loans and grants to the world’s poorest countries. These “soft” loan terms allow for improved economic development and poverty reduction. Unlike the World Bank, the IDA seeks to reduce poverty by providing loans to developing countries for programs that are intended to boost economic growth and improve living conditions.
