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. Who is the ex-officio Chairperson of the Monetary Policy Committee (MPC)?
[A] The Finance Minister of India
[B] The Deputy Governor of RBI
[C] Secretary, Department of Economic Affairs
[D] Governor of Reserve Bank of India
Show Answer
Correct Answer: D [Governor of Reserve Bank of India]
Notes:
The Monetary Policy Committee was formed in 2016 after an amendment to the RBI Act, 1934. The Committee consists of six members: three from the Reserve Bank of India and three nominated by the Central Government. The Governor of the Reserve Bank of India is designated as the ex-officio Chairperson of the Monetary Policy Committee.
2. Which is NOT an economic factor contributing to poverty in India?
[A] Caste-based social discrimination
[B] Low agricultural productivity
[C] Unemployment and underemployment
[D] Rapid population growth
Show Answer
Correct Answer: A [Caste-based social discrimination]
Notes:
Caste-based social discrimination in India is classified as a social, not economic, factor. The caste system leads to social exclusion and restricts access to education and jobs for marginalized groups such as Scheduled Castes and Scheduled Tribes. Social discrimination originates from traditional societal structures and legal history, rather than economic variables like production levels, employment rate, or population growth.
3. The “Service area Approach” was an strategy launched to improve which of the following?
[A] Micro, Small and medium Enterprising
[B] Unorganized Sector
[C] Rural lending
[D] Urban Industrial Lending
Show Answer
Correct Answer: C [Rural lending]
Notes:
The “Service Area Approach” was introduced in 1989 by the Reserve Bank of India to enhance rural lending. It aimed to allocate specific geographical areas to banks, ensuring that credit and financial services reached underserved rural populations. This strategy was part of broader efforts to promote financial inclusion and support rural development, addressing the needs of agriculture and small enterprises.
4. How many currencies are included in the BIS REER basket?
[A] 6
[B] 26
[C] 36
[D] 64
Show Answer
Correct Answer: D [64]
Notes:
The Bank for International Settlements (BIS) calculates the broad real effective exchange rate (REER) index using a basket of 64 currencies. The BIS methodology weights these currencies according to trade shares to reflect the competitiveness of a country in the global market. BIS also publishes narrower REER indices, like a 27-currency basket, but the broadest index uses 64 currencies.
5. Which has the highest weightage in the Index of Industrial Production (IIP)?
[A] Electricity
[B] Steel Industry
[C] Refinery Products
[D] Coal
Show Answer
Correct Answer: C [Refinery Products]
Notes:
Refinery products have the highest weightage of 28.04% in the Index of Industrial Production as per the IIP series with base year 2011-12. The Index of Industrial Production was first published in 1937. The IIP is calculated and released by the National Statistical Office, Ministry of Statistics and Programme Implementation, Government of India.
6. 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.
7. Which option defines ‘shares outstanding’ most accurately?
[A] Total shares authorized minus never issued shares
[B] Total issued shares minus treasury shares
[C] Shares held only by institutional investors and insiders
[D] All authorized shares sold to investors
Show Answer
Correct Answer: B [Total issued shares minus treasury shares]
Notes:
Shares outstanding equals total issued shares minus treasury shares. Treasury shares are shares repurchased by the company and held in its treasury. Shares outstanding are used in calculating market capitalization and earnings per share. Only shares held by external shareholders are considered outstanding. This figure changes when the company buys back or issues new shares.
8. The Financial Stability Board (FSB) is mainly linked to which group of countries?
[A] BRICS Nations
[B] G-20 Countries
[C] SAARC Countries
[D] APEC Members
Show Answer
Correct Answer: B [G-20 Countries]
Notes:
The Financial Stability Board was established in 2009 after the G20 Pittsburgh Summit. It succeeded the Financial Stability Forum. The Board includes all G20 major economies, FSF members, and the European Commission. The Board is hosted by the Bank for International Settlements in Basel, Switzerland. The FSB’s formation and mandate are directly associated with the G-20 group of countries.
9. Consider the following statements regarding the Asian Infrastructure Investment Bank (AIIB):
- India participated in the founding of the bank and signed the Memorandum of Understanding in October 2014.
- The headquarters of the AIIB are located in Beijing, China, specifically at the Asia Financial Center in the Olympic Forest Park area.
- The AIIB currently has over 100 member states from around the world.
Which of the above statements is/are correct?
[A] Only 1
[B] 1 and 2 only
[C] 2 and 3 only
[D] 1, 2 and 3
Show Answer
Correct Answer: D [1, 2 and 3]
Notes:
All three statements are correct. India was among the founding members of the AIIB and signed the MoU in October 2014. The bank’s headquarters are indeed located in Beijing’s Asia Financial Center in the Olympic Forest Park area. As of now, AIIB has 111 members (including prospective members) from different continents, confirming it has over 100 member states.
10. With reference to various types of Banking, what is “Mixed Banking”?
[A] when banks undertake the activities of commercial and investment banking together
[B] when banks undertake the activities of wholesale and retail banking together
[C] when banks undertake the activities of offline and online banking together
[D] when banks undertake the activities of commercial and cooperative banking together
Show Answer
Correct Answer: A [when banks undertake the activities of commercial and investment banking together]
Notes:Mixed Banking is the system in which banks undertake activities of commercial and investment banking together.
- These banks give short-term and long-term loans to industrial concerns.
- The banks appoint experts which give valuable advice on various financial issues and also help gauge the financial health of companies.
- Industries don’t have to run to different places for differential financial needs.
- They thus promote rapid industrialization.
- They may however pose a grave threat to liquidity of a bank and lead to bad debts.
