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 imposes a greater burden (relative to resources) on the poor than on the rich ?
[A] Progressive tax
[B] Regressive Tax
[C] Lump Sum tax
[D] Proportional tax
Show Answer
Correct Answer: B [Regressive Tax]
Notes:
A regressive tax is the one in which tax rate decreases as the amount subject to taxation increases; and the tax rate progresses from high to low. The lowest amount is subject to higher taxation and this leads to individuals with low income bear the highest burden of regressive taxes. Such tax does not take into account the ability to pay.
2. 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.
3. The government has responsibility to ensure availability of which among the following to all consumers regardless of their ability to pay price?
[A] Giffen Goods
[B] Supplementary Goods
[C] Merit Goods
[D] Complementary Goods
Show Answer
Correct Answer: C [Merit Goods]
Notes:
The correct answer is Merit Goods. Merit goods are products or services that the government believes are beneficial for individuals and society, and thus should be available to all, regardless of their ability to pay. Examples include education and healthcare. Governments often subsidize these goods to ensure equitable access, as they can lead to positive externalities, such as a more educated workforce and improved public health.
4. For the first time in India, in which of the following Budgets “basic reforms in the international financial and trading system ” was stressed in India?
[A] 1969
[B] 1980
[C] 1983
[D] 1984
Show Answer
Correct Answer: C [1983]
Notes:
In the 1983 Budget, Finance Minister R. Venkataraman emphasized “basic reforms in the international financial and trading system” for the first time in India. This was a pivotal moment as it marked a shift towards liberalization and modernization of India’s economy, laying the groundwork for future reforms in the 1990s. The 1983 Budget aimed to address economic challenges and improve India’s global trade position.
5. Which is not an inflation control measure by the Government or RBI?
[A] Repo Rate Adjustment
[B] Open Market Operations
[C] Cash Reserve Ratio (CRR)
[D] Financial Inclusion
Show Answer
Correct Answer: D [Financial Inclusion]
Notes:
Financial inclusion refers to providing banking and financial services to all sections of society. RBI and the Government use repo rate adjustments, open market operations, and changing CRR as monetary policy tools to manage money supply and inflation. Financial inclusion programs focus on expanding access, such as PMJDY launched in 2014, and do not directly affect inflation control.
6. 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.
7. Which of the following bodies procures, distributes, exports and imports agricultural commodities?
[A] FCI
[B] NAFED
[C] NABARD
[D] All of them
Show Answer
Correct Answer: B [ NAFED ]
Notes:
NAFED is the apex body in cooperative sector and deals in procurement , distribution, export and import of selected agricultural commodities.
8. Which organization classifies countries into IDA, IBRD, and Blend categories?
[A] International Monetary Fund
[B] Asian Development Bank
[C] World Bank
[D] New Development Bank
Show Answer
Correct Answer: C [World Bank]
Notes:
The World Bank groups economies into IBRD, IDA, and Blend categories for operational lending. IDA members have low GNI per capita below $1,325 for fiscal year 2026. IBRD includes creditworthy economies. Blend countries qualify for both IDA and IBRD support. Seventy-eight countries are currently eligible for IDA resources. The World Bank comprises the IBRD and IDA institutions.
9. Consider the following statements regarding the “PRASAD” scheme:
- It focuses on the development and rejuvenation of identified pilgrimage destinations and heritage cities.
- Under the scheme, the Ministry of Tourism provides Central Financial Assistance (CFA) to State Governments/Union Territory Administrations for tourism projects.
- As per the most recent data, 54 projects have been sanctioned under the scheme across 28 States/UTs.
Which of the above statements is/are correct?
[A] Only 1 and 2
[B] Only 2 and 3
[C] Only 1 and 3
[D] 1, 2 and 3
Show Answer
Correct Answer: D [1, 2 and 3]
Notes:
The PRASAD scheme, launched by the Ministry of Tourism in 2014-15, stands for Pilgrimage Rejuvenation and Spiritual Augmentation Drive. Statement 1 is correct: it targets pilgrimage and heritage city development. Statement 2 is correct: the ministry provides Central Financial Assistance. Statement 3 is correct: 54 projects in 28 States/UTs have been sanctioned under the scheme as per latest data.
10. Which institution currently owns National Housing Bank?
[A] RBI
[B] Ministry of Finance
[C] Government of India
[D] SEBI
Show Answer
Correct Answer: C [Government of India]
Notes:
The National Housing Bank was established in 1988 under the National Housing Bank Act, 1987. It was initially a subsidiary of the Reserve Bank of India. In March 2019, RBI transferred its entire stake to the Government of India. NHB operates under the Ministry of Finance. NHB’s head office is located in New Delhi.
