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 India’s rank in the Travel and Tourism Development Index 2024?
[A] 34th
[B] 54th
[C] 38th
[D] 39th
Show Answer
Correct Answer: D [39th]
Notes:
The World Economic Forum published the Travel and Tourism Development Index 2024. India was ranked 39th among 119 countries in this index. The index measures factors supporting tourism development globally. India’s position improved over previous years. The Travel and Tourism Development Index is released every two years.
2. Which economic law states “bad money drives out good money”?
[A] Wagner’s law
[B] Keynes’ law
[C] Grimm’s law
[D] Gresham’s law
Show Answer
Correct Answer: D [Gresham’s law]
Notes:
Gresham’s law, enunciated by Sir Thomas Gresham, states that inferior currency (bad money) in circulation displaces valuable or superior currency (good money) if both are accepted at same face value, as people hoard the good currency and spend the bad.
3. India’s first Export Promotion Industrial park was opened in:
[A] Delhi
[B] Nagpur
[C] Jaipur
[D] Bangalore
Show Answer
Correct Answer: C [Jaipur]
Notes:
India’s first Export Promotion Industrial Park (EPIP) was opened in Jaipur. The EPIP in Rajasthan at Sitapura is complete. The park is the largest Export-Park in Northern India.
The EPIP scheme was implemented to create infrastructure for exports in specific locations. The parks have modern infrastructure to boost the export of commodities and services. Units in the EPIP must commit to exporting at least 33% of their production.
4. Which is classified as an economic overhead?
[A] Hospitals
[B] Schools
[C] Sanitation facilities
[D] Road and Railways
Show Answer
Correct Answer: D [Road and Railways]
Notes:
Road and railways are economic overheads as they provide essential infrastructure for transportation and movement of goods, stimulating economic activity. Hospitals, schools, and sanitation are social overheads, catering mainly to health, education, and hygiene rather than direct economic productivity.
5. Which are the top three debtors of the World Bank (IBRD)?
[A] India, Brazil, Turkey
[B] Brazil, India, Mexico
[C] India, Turkey, Indonesia
[D] Brazil, Turkey, Philippines
Show Answer
Correct Answer: B [Brazil, India, Mexico]
Notes:
Brazil, India, and Mexico have the highest outstanding IBRD loan commitments as per recent World Bank data. Brazil’s net IBRD commitments lead global figures. India was among the top recipients in 2023, borrowing over 4.3 billion U.S. dollars. Mexico also remains a principal IBRD borrower for infrastructure and development projects in recent years. These three countries routinely top IBRD debt statistics globally.
6. Consider the following statements:
- The Market Stabilization Scheme provides for issue of Treasury Bills and/or dated securities by the Government in addition to their normal market borrowing programme up to an annual aggregate ceiling.
- The money raised in Market Stabilization Fund is kept in the MSS Account as a part of Consolidated Fund of India
- The auditing of the MSS Fund is done by Comptroller and Auditor General of India
Which among the above statements is / are correct?
[A] Only 1 is correct
[B] Only 1 & 2 are correct
[C] 1, 2 & 3 are correct
[D] Only 1 & 3 are correct
Show Answer
Correct Answer: A [Only 1 is correct]
Notes:
The correct answer is “Only 1 is correct.” Explanation: 1. The Market Stabilization Scheme (MSS) allows the government to issue Treasury Bills and dated securities to manage liquidity, but it does not involve a separate borrowing program beyond the normal limits. 2. The money raised under the MSS is not kept in the MSS Account as part of the Consolidated Fund of India. instead, it is maintained in a separate account. 3. While the Comptroller and Auditor General of India (CAG) audits government accounts, the MSS Fund itself is not specifically audited by the CAG. Trivia Fact: The MSS was introduced in 2004 to help the Reserve Bank of India manage excess liquidity in the economy, particularly during periods of high capital inflows.
7. What relationship does the Laffer Curve show between tax rates and tax revenue?
[A] Tax revenue increases continuously as tax rates rise
[B] Tax revenue increases then decreases after an optimal tax rate
[C] Tax revenue decreases continuously as tax rates rise
[D] Tax revenue remains constant at all tax rates
Show Answer
Correct Answer: B [Tax revenue increases then decreases after an optimal tax rate]
Notes:
The Laffer Curve was developed by economist Arthur Laffer in 1974. It illustrates that government tax revenue increases with higher tax rates up to a specific optimal point. Beyond this optimal rate, further increases in the tax rate lead to a decline in revenue due to reduced economic activity and shrinking tax base. The precise optimal rate is not fixed and varies by country and economy.
8. Which among the following is the primary difference between a free trade area and a customs union?
[A] members of a free trade area adopt a common set of barriers for trade between the members
[B] a free trade area is considered a trade bloc and a customs union is not
[C] members of a customs union adopt a common set of external trade barriers
[D] a free trade area can include parts of a country and a customs union includes entire countries
Show Answer
Correct Answer: C [ members of a customs union adopt a common set of external trade barriers ]
Notes:
The primary difference between a free trade area and a customs union is that members of a customs union adopt a common set of external trade barriers. In a free trade area, member countries eliminate tariffs among themselves but maintain their own external tariffs. Examples include NAFTA (now USMCA) as a free trade area and the European Union as a customs union, which has a unified external tariff policy.
9. Which of the following are used as tool for the Liquidity adjustment facility (LAF)?
- Repo Rate
- Reverse Repo Rate
- Cash Reserve Ratio
- Statutory liquidity ratio
Select the correct option from codes given below:
[A] 1 & 2 Only
[B] 3 & 4 Only
[C] 1, 2 & 3 Only
[D] 1, 2, 3 & 4
Show Answer
Correct Answer: A [ 1 & 2 Only ]
Notes:
Liquidity adjustment facility (LAF) is a monetary policy tool which allows banks to borrow money through repurchase agreements. It consists of Rep and Reverse Repo Rate.
10. Which of the following is / are correct statements about “Adopt a Heritage Scheme”?
- It is an initiative under Ministry of Culture
- Under this scheme, government has appointed private as well as public companies as “Monument Mitras” to boost heritage tourism in the country
Select the correct option from the codes given below:
[A] Only 1
[B] Only 2
[C] Both 1 & 2
[D] Neither 1 nor 2
Show Answer
Correct Answer: B [Only 2 ]
Notes:
First statement is incorrect. The “Adopt a Heritage Scheme” is an initiative under Ministry of Tourism. Second statement is correct. Under this scheme, the government has appointed private as well as public companies as “Monument Mitras” for making heritage tourism more sustainable through conservation and development. The short-listed companies, to be called Monument Mitras, are from various sectors such as hospitality, travel, and banking.
