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. An autonomous increase in expenditure should result in an increase in a country’s real GNP only if ?
[A] The country’s balance of trade is negative
[B] The country’s economy is working under conditions of less than full employment
[C] It is government expenditure
[D] The multiplier is at least 1.5
Show Answer
Correct Answer: B [The country’s economy is working under conditions of less than full employment]
Notes:
When the economy is working under conditions of less than full employment, the GDP gap is positive and the economy operates at less than potential. At this point, an increase in expenditure would result in an increase in a country’s real GNP.
2. When a person has a saving account in the bank , the bank assumes the position of ___?
[A] Debtor
[B] Creditor
[C] Agency
[D] Depositor
Show Answer
Correct Answer: A [Debtor]
Notes:
please note bank functions as an agent or agency when it buys or sells securities on behalf of the customer or collects and makes payment on behalf of the customer
3. Who was the first Deputy Chairman of India’s Planning Commission?
[A] V.T. Krishnamachari
[B] C.M. Trivedi
[C] Gulzari Lal Nanda
[D] Ashok Mehta
Show Answer
Correct Answer: C [Gulzari Lal Nanda]
Notes:
Gulzari Lal Nanda was the first Deputy Chairman of the Planning Commission and later served twice as interim Prime Minister of India. He played a key role in planning policy after independence.
4. Consider the following statements about the Government Securities (G-sec) market in India:
- Speculation exists in the G-sec market, particularly through activities such as margin trading and short-term position trading.
- Institutional investors dominate the G-sec market, accounting for the majority of trading volume.
Which of the above statements is/are correct?
[A] Only 1 is correct
[B] Only 2 is correct
[C] Both 1 and 2 are correct
[D] Neither 1 nor 2 is correct
Show Answer
Correct Answer: C [Both 1 and 2 are correct]
Notes:
Both statements are correct. The G-sec market does witness speculative activities, including margin trading and short-term trades, often leading to price volatility. Furthermore, institutional investors such as banks, insurance companies, and pension funds are the predominant participants in the G-sec market, holding and trading most government securities for liquidity and investment purposes.
5. Which is India’s largest investor in the debt market?
[A] LIC of India
[B] ICICI Bank
[C] State Bank of India
[D] EPFO
Show Answer
Correct Answer: D [EPFO]
Notes:
EPFO, Employees’ Provident Fund Organisation, manages over Rs 28 lakh crore in assets as of 2023. EPFO allocates more than 89% of its portfolio to debt instruments. The organization invests in central and state government securities, State Development Loans, and corporate bonds. EPFO was established in 1952 under the Employees’ Provident Funds and Miscellaneous Provisions Act.
6. With reference to the World Trade Organization, the principle of reciprocity within WTO framework envisages?
[A] Lowering of trade barriers by a State to be matched in return.
[B] Creation of trade barriers on uniform basis
[C] Protection of intellectual property rights.
[D] Enhanced role for State controls on trade
Show Answer
Correct Answer: A [ Lowering of trade barriers by a State to be matched in return. ]
Notes:
The principle of reciprocity in the WTO framework means that when one member lowers trade barriers, other members are expected to do the same in return. This mutual concession promotes fair trade practices and encourages countries to engage in negotiations. Reciprocity is fundamental to the WTO’s goal of reducing trade barriers globally, fostering a more open and equitable trading system.
7. The term OTDS is mainly linked to which WTO negotiation area?
[A] Intellectual Property & Geographical Indications
[B] Non-Agricultural Market Access (NAMA)
[C] Agriculture
[D] Services Trade
Show Answer
Correct Answer: C [Agriculture]
Notes:
Overall Trade-Distorting Domestic Support (OTDS) is defined in the context of WTO agriculture negotiations. OTDS includes Aggregate Measure of Support (AMS), Blue Box payments, and de minimis support. OTDS commitments were discussed during the Doha Round agriculture talks beginning in 2001. WTO ministerial conferences periodically review and negotiate OTDS reduction by member countries. India and other countries have submitted proposals focusing on agriculture OTDS at these negotiations.
8. At which rate does RBI borrow funds from commercial banks?
[A] Bank Rate
[B] Repo Rate
[C] Reverse Repo Rate
[D] Statutory Liquidity Ratio
Show Answer
Correct Answer: C [Reverse Repo Rate]
Notes:
The reverse repo rate is the rate at which the Reserve Bank of India borrows money from commercial banks. It is used to absorb liquidity from the banking system. RBI conducts reverse repo operations as part of its monetary policy framework. As of June 2024, the reverse repo rate is 3.35%. Reverse repo was introduced in 1996 under Section 17(4B) of the RBI Act, 1934.
9. In which of the following market forms a firm does not exercise control over price?
[A] Monopoly
[B] Mixed Competition
[C] Perfect competition
[D] Oligopoly
Show Answer
Correct Answer: C [Perfect competition]
Notes:
In economics, specifically general equilibrium theory, a perfect market is defined by several idealizing conditions, collectively called perfect competition.
10. NABARD, which is set up to provide loans for rural development, belongs to which of the following categories? (UPSC Prelims 1982)
[A] Bank
[B] Board
[C] Block
[D] Department
Show Answer
Correct Answer: A [Bank]
Notes:
NABARD stands for National Bank for Agriculture and Rural Development. It is an apex development financial institution in India. It is an institution fully owned by Government of India, headquartered at Mumbai with regional offices all over India.
