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. In which of the five year plan in India, the concept of Financial Inclusion was included for the first time?
[A] 8th Five Year Plan
[B] 9th Five Year Plan
[C] 10th Five Year Plan
[D] 11th Five Year Plan
Show Answer
Correct Answer: D [11th Five Year Plan]
Notes:
The 11th Five Year Plan was implemented from 2007-2012, when Manmohan Sigh was India’s Prime Minster. The main slogan for the 11th FYP was “Faster and more inclusive growth”. The 11th FYP made special emphasis on Financial Inclusion, poverty reduction, empowerment through education and skill development etc.
2. What does the FDI trigger list in India primarily include?
[A] List of country-specific FDI restrictions under FEMA
[B] Sectors needing prior approval, like broadcasting and civil aviation
[C] Investors with suspicious funds and sectors or locations needing security screening
[D] All proposals submitted to DPIIT for automatic route processing
Show Answer
Correct Answer: C [Investors with suspicious funds and sectors or locations needing security screening]
Notes:
The FDI trigger list in India includes proposals from investors with suspicious sources of funds and investments in sensitive sectors like broadcasting, telecommunications, civil aviation, and private security agencies. Investments in sensitive geographic areas, such as Jammu & Kashmir, are also included. Such proposals are scrutinized by the Ministry of Home Affairs for national security under the Foreign Exchange Management Act.
3. Round-tripping is associated with which of the following?
[A] Capital Markets
[B] Foreign Direct Investments
[C] Cash Deposits
[D] Foreign Remittances
Show Answer
Correct Answer: B [Foreign Direct Investments]
Notes:
Round-tripping involves domestic funds sent abroad and returning as foreign direct investment (FDI), often through offshore financial centers like Mauritius and Cyprus. India has observed FDI inflows suspected to involve round-tripping, especially in the 2000s and 2010s. The Department for Promotion of Industry and Internal Trade monitors FDI trends. Round-tripping bypasses tax regulations on FDI in multiple countries, including India.
4. Which tools and goals define fiscal policy?
[A] Managing interest rates and money supply
[B] Taxation and government spending to influence economy
[C] Open market operations for bank reserves
[D] Setting reserve requirements for banks
Show Answer
Correct Answer: B [Taxation and government spending to influence economy]
Notes:
Fiscal policy uses government taxation and spending to affect economic growth, employment, and inflation. Main tools are tax adjustments and expenditure management. These decisions are made through the government’s annual budget process. Fiscal policy is distinguished from monetary policy, which is implemented by central banks using instruments such as interest rates, reserve requirements, and open market operations.
5. From time to time, which among the following body publishes the “Exchange Control Manual” in context with the Foreign Exchange in India?
[A] Foreign Trade Promotion Board
[B] Department of Commerce
[C] Reserve Bank of India
[D] SEBI
Show Answer
Correct Answer: C [Reserve Bank of India]
Notes:
The correct answer is the Reserve Bank of India (RBI). The RBI is responsible for regulating foreign exchange in India under the Foreign Exchange Management Act (FEMA) of 1999. The “Exchange Control Manual” provides guidelines for foreign exchange transactions and is crucial for maintaining the stability of the Indian economy. The RBI also plays a key role in managing the country’s foreign exchange reserves and ensuring compliance with international financial regulations.
6. The Laffer curve is the graphical representation of :
[A] The relationship between tax rates and absolute revenue these rates generate for the government.
[B] The inverse relationship between the rate of unemployment and the rate of inflation in an economy.
[C] The inequality in income distribution
[D] The relationship between environmental quality and economic development.
Show Answer
Correct Answer: A [The relationship between tax rates and absolute revenue these rates generate for the government.]
Notes:
In economics, the Laffer curve is a hypothetical representation of the relationship between government revenue raised by taxation and all possible rates of taxation. It is used to illustrate the concept of taxable income elasticity – that taxable income will change in response to changes in the rate of taxation.
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 body decides the allocation of tax shares between Union and States?
[A] Parliament
[B] Finance Commission
[C] Ministry of Finance
[D] Public Accounts Committee
Show Answer
Correct Answer: A [Parliament]
Notes:
Parliament decides the allocation of tax shares between Union and States as per Articles 270 and 272 of the Constitution. Parliament enacts laws based on recommendations from the Finance Commission, such as the 16th Finance Commission’s recommendation of a 41% share to States for 2026–31. The Ministry of Finance implements these decisions after they are legislated by Parliament.
9. Which Public Sector Giant issued world’s first Indian green masala bond?
[A] ONGC
[B] NTPC
[C] IOCL
[D] CIL
Show Answer
Correct Answer: B [ NTPC ]
Notes:
State-owned energy major National Thermal Power Corporation (NTPC) raised almost Rs 2,000 crores with the launch of its ‘Green Masala Bond’ on the London Stock Exchange (LSE). NTPC’s bond issue has been described as the first-ever Indian quasi-sovereign to issue a Masala Bond.
10. Which issue caused the collapse of Doha Round WTO talks in July 2008?
[A] Elimination of agricultural export subsidies
[B] Special safeguard mechanism for developing countries in agriculture
[C] Tariff elimination timelines in industrial products
[D] Intellectual property rights protections
Show Answer
Correct Answer: B [Special safeguard mechanism for developing countries in agriculture]
Notes:
The Doha Round negotiations collapsed in July 2008 over disagreements regarding the special safeguard mechanism (SSM) for developing countries in agriculture. The SSM was meant to allow developing nations to raise tariffs temporarily in response to import surges. India and China sought more flexibility, which the United States and others opposed, leading to a breakdown.
