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 number of members in the Monetary Policy Committee (MPC)?
[A] 4
[B] 5
[C] 6
[D] 7
Show Answer
Correct Answer: C [ 6 ]
Notes:
Monetary Policy Committee (MPC) committee comprises six members – three officials of the Reserve Bank of India and three external members nominated by the Government of India.
2. Which commodity is directly affected by international crude oil price fluctuations?
[A] Edible Oils
[B] Cereals
[C] Consumer nondurables
[D] Gold & Silver
Show Answer
Correct Answer: D [Gold & Silver]
Notes:
Gold and silver prices are directly influenced by changes in international crude oil prices. Increases in crude oil prices often cause currency depreciation in oil-importing countries, raising the cost of gold and silver imports. Price fluctuations can also increase demand for gold and silver as safe-haven assets. The global commodities market historically links oil and precious metals prices.
3. 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.
4. Which tool is used for sterilization during foreign capital inflows to control inflation?
[A] Filtering undeclared foreign assets
[B] Selling government securities in the open market
[C] Imposing restrictions on foreign exchange trading
[D] Allowing currency to appreciate freely
Show Answer
Correct Answer: B [Selling government securities in the open market]
Notes:
Sterilization involves central banks selling government securities in the open market to absorb liquidity created by foreign capital inflows. The Reserve Bank of India uses open market operations for this purpose. By selling government securities, the central bank withdraws excess rupee liquidity from the banking system. This method helps limit the expansion of the money supply and manage inflationary pressures resulting from increased foreign exchange reserves.
5. What is India’s rank in steel production in the world?
[A] 1st
[B] 2nd
[C] 3rd
[D] 4th
Show Answer
Correct Answer: B [2nd]
Notes:
In 2024, India was the second-largest steel producer after China. India produced around 149.4 to 149.6 million tonnes of crude steel. China produced 1,005.1 million tonnes, and Japan ranked third with 84 million tonnes. Major Indian companies include Tata Steel, JSW Steel Limited, and SAIL. India plans to expand steel production capacity to 300 million tonnes by 2030 and 500 million tonnes by 2047.
6. Investment in which among the following is the Most Risk Free asset of a Bank as per the RBI guidelines?
[A] Housing Loans
[B] Government Approved Securities
[C] Venture Capital Investments
[D] Loans against Jewellery
Show Answer
Correct Answer: B [Government Approved Securities]
7. The mosquito fern or Azolla is one of the most important bio fertilizers. In association with which among the following Azolla acts as a biofertilizer?
[A] Bacteria
[B] Blue-green algae
[C] Fungus
[D] Green algae
Show Answer
Correct Answer: B [ Blue-green algae]
Notes:
Bio-fertilizers such as Rhizobium, Azotobacter, Azospirillum and blue green algae (BGA) have been in use a long time. Anabaena, a blue green alga in association with water fern Azolla contributes nitrogen and also enriches soils with organic matter.
8. In context with the share markets in India, public issue refers to which of the following?
[A] first time issuance of shares of a company via stock exchange
[B] first time issuance of shares of a public company via stock exchange
[C] allotment of shares to 50 or more investors
[D] allotment of shares to public by 50% or more fraction of the total equity
Show Answer
Correct Answer: C [ allotment of shares to 50 or more investors ]
Notes:
The primary market issuance is done either through public issues or private placement. Under Companies Act, 1956, an issue is referred as public if it results in allotment of securities to 50 investors or more. However, when the issuer makes an issue of securities to a select group of persons not exceeding 49 and which is neither a rights issue nor a public issue it is called a private placement.
9. Which of the following are included in the Forex of India?
[A] Foreign Currency Assets
[B] SDRs
[C] Reserve Position in the IMF
[D] All of the above
Show Answer
Correct Answer: D [All of the above]
Notes:
The Foreign exchange reserves of India consists of below four categories: 1. Foreign Currency Assets 2. Gold 3. Special Drawing Rights (SDRs) 4. Reserve Tranche Position
10. What does a decreasing agricultural sector share in GDP indicate for a country?
[A] The country is heading toward developed nation status
[B] The country is becoming a developing nation
[C] The country is becoming less developed
[D] Agricultural production has completely stopped
Show Answer
Correct Answer: A [The country is heading toward developed nation status]
Notes:
The agricultural sector’s GDP share typically declines as countries industrialize and modernize. In 2023, developed economies like the United States had agriculture contributing less than 1% to GDP. In developing nations, the sector’s share is higher—such as Kenya at around 33%. A falling agricultural share indicates structural transformation toward an industrial and service-based economy.
