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 statement defines a balanced budget?
[A] Total expenditure exceeds total revenue
[B] Total revenue equals total expenditure
[C] Total revenue exceeds total expenditure
[D] Total revenue equals or exceeds expenditure
Show Answer
Correct Answer: B [Total revenue equals total expenditure]
Notes:
A balanced budget occurs when a government’s total revenue matches its total expenditure within a fiscal year. The concept is found in public finance literature and is used by various countries’ budgets. The Government of India’s budgets list balanced budgets when revenue and expenditure are equal with no deficit or surplus.
2. Which among the following is an anti-inflationary measure?
[A] Stagflation
[B] Hyper inflation
[C] Disinflation
[D] Deflation
Show Answer
Correct Answer: C [Disinflation]
Notes:
Disinflation means the decrease in the rate of inflation. It is a slowdown in the rate of increase of price levels of goods and services. This is different from deflation, in the way that Disinflation is only a marginal and short term decrease in rate of inflation.
3. In which Five Year Plan was the Khadi and Village Industries Commission launched?
[A] First
[B] Second
[C] Third
[D] Fourth
Show Answer
Correct Answer: B [Second]
Notes:
The Khadi and Village Industries Commission was established in April 1957 during the Second Five Year Plan. It assumed the functions of the former All India Khadi and Village Industries Board. The commission operates as a statutory body under the Ministry of Micro, Small and Medium Enterprises, Government of India. Its objectives include promoting and developing khadi and village industries in rural areas.
4. Economic Planning comes under which of the following lists ?
[A] Union List
[B] Concurrent list
[C] State List
[D] None of them
Show Answer
Correct Answer: B [Concurrent list]
Notes:
Economic planning is listed in the Concurrent List, or List III, of the Seventh Schedule of the Constitution of India. The Concurrent List is a list of 52 items that both the central and state governments can make laws on. The Concurrent List includes topics such as criminal law, marriage and divorce, bankruptcy, and economic and social planning.
5. In which among the following types comes the Interest Rate Risk?
[A] Credit risk
[B] Market risk
[C] Operational risk
[D] All the above categories
Show Answer
Correct Answer: B [Market risk]
Notes:
Interest Rate Risk falls under Market Risk. Market risk encompasses the potential for financial loss due to fluctuations in market prices, including interest rates. Interest rate changes can affect the value of investments, particularly fixed-income securities. For example, when interest rates rise, the prices of existing bonds typically fall, leading to potential losses for investors. This risk is a critical consideration for financial institutions and investors alike.
6. Cultural command area calculations are used in which of the following?
[A] Preparation of a Land Development Plan
[B] Designing an Irrigation Plan
[C] Prepare a plan for new crops introduction
[D] Design the agricultural policy
Show Answer
Correct Answer: B [Designing an Irrigation Plan]
Notes:
Cultural command area refers to the area that can be irrigated and cultivated after suitable preparation. It is a key parameter in designing irrigation plans to determine the extent of land that irrigation projects can serve effectively. Calculation of cultural command area is a standard part of planning for canal and irrigation networks in Indian agriculture and water resource engineering.
7. Which term is not formally linked with Indian government budgets?
[A] Outcome Budget
[B] Gender Budget
[C] Austerity Budget
[D] Performance Budget
Show Answer
Correct Answer: C [Austerity Budget]
Notes:
Austerity Budget is not an official budget type in India. Outcome Budget was introduced in 2005 to link allocations with measurable results. Gender Budget was initiated in 2005-06 for women’s development. Performance Budget allocates funds based on achievements. The Indian Union Budget officially includes Outcome, Gender, and Performance Budgets, but not Austerity Budget.
8. How does the Indian government provide food subsidy?
[A] By fixing Central Issue Prices only
[B] Through Public Distribution System only
[C] By funding Food Corporation of India only
[D] All of the above
Show Answer
Correct Answer: D [All of the above]
Notes:
The Public Distribution System distributes subsidized foodgrains to eligible households under the National Food Security Act, 2013. The Food Corporation of India receives government funding for procurement and distribution of grains. Central Issue Prices are set by the government for affordable supply. As of January 2024, free foodgrains are provided to beneficiary households, impacting over 81 crore people.
9. Which port exports the highest value of seafood from India?
[A] Visakhapatnam
[B] Tuticorin
[C] Kochi
[D] Jawaharlal Nehru Port Authority (JNPT)
Show Answer
Correct Answer: A [Visakhapatnam]
Notes:
Visakhapatnam Port handled $2.19 billion or 29.72% of India’s seafood exports in FY24. In FY25, Visakhapatnam’s seafood export value exceeded $2 billion out of India’s total $7.45 billion. The port exported 314,199 tonnes, while JNPT exported 240,253 tonnes valued at $779.49 million. Andhra Pradesh’s aquaculture, mainly Vanammei shrimp, supports Visakhapatnam’s status as the top exporter.
10. Which of the following is the least preferred option by government for deficit financing?
[A] Printing of currency notes
[B] Loans from World bank and IMF
[C] Disinvestment of government holdings
[D] Open sale of government securities and bonds in market
Show Answer
Correct Answer: A [ Printing of currency notes ]
Notes:
Printing of currency creates a situation where too much money chases few goods and thus leads to condition of inflation. So; it is the last preferred option for government.
