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 an essential feature of a commercial bank?
[A] providing Locker facilities
[B] dealing with credit
[C] providing business information and data
[D] Sale of securities
Show Answer
Correct Answer: B [dealing with credit]
Notes:
Section 5 of Banking Regulation Act 1949 defines Banking as the act of accepting deposits for the purpose of lending. Commercial banks deal with money, accepts deposits and advance short-term loans / credits.
2. Which of the following types of economic planning is a feature of Mixed Economy?
[A] Indicative Planning
[B] Comprehensive Planning
[C] Imperative Planning
[D] Perspective Planning
Show Answer
Correct Answer: A [Indicative Planning]
Notes:
Indicative planning, which generally puts forward some broad principles and guidelines to achieve some specific goals. Indicative planning is flexible. It is peculiar to mixed economy and both the public and private sector co exist.
Comprehensive or imperative planning is used by socialist countries and each and every aspect of planning is controlled by the State. Perspective planning refers to long term planning for a period of 15, 20, 25 yrs, however objective of perspective planning can be achieved by breaking the period in 5‐7 yr plans.
3. Consider the following places:
- Mumbai
- Hyderabad
- Kolkata
- Noida
Which of the above are known for coin minting in India?
[A] 1, 2 & 3 Only
[B] 2 & 4 Only
[C] 2, 3 & 4 Only
[D] 1, 2, 3 & 4
Show Answer
Correct Answer: D [ 1, 2, 3 & 4 ]
Notes:
SPMCIL comprises four mints: India Government Mint in Mumbai, Hyderabad, Kolkata and Noida.
4. 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.
5. What happens when CRR is increased?
[A] It decreases money supply
[B] It increases demand for money
[C] It decreases inflation
[D] All of the above
Show Answer
Correct Answer: D [All of the above]
Notes:
When CRR is increased , it decreases money supply, Increases interest rates on home loans, car loans etc. and in inter-bank market, Increases demand for money and decreases inflation.
6. What do we call the instruments of monetary policy which directly affect the quantity of money supply?
[A] Quantitative instruments
[B] Qualitative instruments
[C] Money instruments
[D] None of the above
Show Answer
Correct Answer: A [Quantitative instruments]
Notes:
The instruments of monetary policy which directly affect the quantity of money supply are called as Quantitative instruments. Example: Open Market Operations Liquidity Adjustment Facility (Repo and Reverse Repo) etc.
7. Who takes the decision regarding the saving and loan activities in a self Help Group (SHG)?
[A] Private Bank
[B] Reserve Bank of India
[C] Members of group
[D] Non Government Organizations
Show Answer
Correct Answer: C [Members of group]
Notes:
Self Help Groups (SHGs) are small groups of poor people. The members of an SHG face similar problems. They help each other, to solve their problems. SHGs promote small savings among their members.
8. Which among the following is not an instrument of fiscal policy?
[A] Taxation
[B] Public expenditure
[C] Public debt
[D] Credit Rationing
Show Answer
Correct Answer: D [Credit Rationing]
Notes:
The 3 main instruments of fiscal policy are government taxation and public expenditure and public debt. Fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation’s economy.
9. Which of the following are money markets instruments?
[A] A 14-day repurchase agreement of Treasury 8% 2007
[B] A treasury bill with 7 days to maturity
[C] A 3-month certificate of deposit
[D] All of the above
Show Answer
Correct Answer: D [ All of the above ]
Notes:
The short-term debts and securities sold on the money markets—which are known as money market instruments—have maturities ranging from one day to more.
10. Which one out of the following is least liquid among the measures of money supply?
[A] M1
[B] M2
[C] M3
[D] M4
Show Answer
Correct Answer: D [M4]
Notes:
Liquidity order is M1>M2>M3>M4 i.e. M1 is most liquid and M4 is least liquid.
