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 among the following is called father of Economics?
[A] David Hume
[B] Lamarck
[C] Adam Smith
[D] John Stuart Mill
Show Answer
Correct Answer: C [Adam Smith]
Notes:
Adam smith is considered as father of Modern Economics. In his book “The nature & causes of wealth of the Nation’s 1776, he has described economics as science of wealth. According to him economy is the study of wealth only and it deals with its production and consumption. Only material goods which are scarce and useful are wealth.
2. Approval of which among the following authorities alone would be sufficient to draw funds from Consolidated Fund of India ?
[A] Only Parliament
[B] Only President
[C] Either Parliament or President
[D] Both Parliament and President
Show Answer
Correct Answer: A [Only Parliament]
Notes:
No money can be appropriated (issued or drawn) out of Consolidated fund of India except in accordance with a parliamentary law.
3. Which among the following ratios correctly denotes Money Multiplier?
[A] M3: M0
[B] M1: M3
[C] M3: M1
[D] M1: M0
Show Answer
Correct Answer: A [M3: M0]
Notes:
Money multiplier is expressed as a ratio between broad money (M3) and Reserve money (M0). It refers to how an initial deposit can lead to a bigger final increase in the total money supply.
4. Countervailing duty is imposed on which of the following?
[A] imported goods
[B] exported goods
[C] imported good on which import subsidy is applicable
[D] exported goods on which export subsidy is applicable
Show Answer
Correct Answer: A [imported goods]
Notes:
Countervailing duties are tariffs imposed on imported goods to offset subsidies provided to producers or exporters in the exporting country. This aims to level the playing field for domestic producers who compete with subsidized imports. The World Trade Organization (WTO) allows such duties to counteract unfair trade practices.
5. Which among the following curve defines the principle that zero tax rate would produce zero revenue for the government and a 100% tax rate would also generate zero revenue for the taxing Government?
[A] Laffer curve
[B] Lorenz curve
[C] Engel curve
[D] Kuznets curve
Show Answer
Correct Answer: A [Laffer curve]
Notes:
The Laffer curve is a theoretical concept in economics that illustrates the relationship between tax rates and government revenue. The curve is named after economist Arthur Laffer, who popularized the concept in the 1970s. The basic idea behind the Laffer curve is that there is a certain tax rate that will maximize government revenue. At a 0% tax rate, the government will obviously not collect any revenue. At a 100% tax rate, the government will also not collect any revenue because people will have no incentive to work. The Laffer curve suggests that there is a point in between these two extremes where the government will collect the most revenue. The exact shape and location of the Laffer curve will vary depending on various factors, such as the state of the economy and the efficiency of the government’s tax collection system.
6. The most active segment of the Money Market in India is which one of the following?
[A] Call Money / Notice Money Market
[B] Repo / Reverse Repo
[C] Commercial Paper (CP)
[D] Certificate of Deposit (CD)
Show Answer
Correct Answer: A [Call Money / Notice Money Market]
Notes:
Call Money / Notice Money Market is the most active segment of the money market in India.
7. Which among the following is correct about an Equity Fund?
[A] It gives fixed returns
[B] It invests primarily in shares
[C] It invest in both debt and shares
[D] It assures growth in value
Show Answer
Correct Answer: B [It invests primarily in shares]
Notes:
An Equity Fund primarily invests in stocks or shares of companies, aiming for capital appreciation. Unlike fixed-income investments, equity funds do not guarantee fixed returns. They can be volatile but historically offer higher long-term returns compared to debt instruments. According to the Securities and Exchange Board of India (SEBI), equity funds must invest at least 65% of their assets in equities to be classified as such.
8. The calculations of “Cultural command area ” are used in which among 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]
9. The Direct Taxes Code is related to which among the following?
[A] Income Tax
[B] Sales tax
[C] Excise Duty
[D] Service tax
Show Answer
Correct Answer: A [Income Tax]
Notes:
The Direct Taxes Code (DTC) is primarily related to Income Tax in India. It was proposed to simplify and consolidate the existing income tax laws, aiming to enhance compliance and reduce litigation. The DTC was first introduced in 2009 but has not yet been enacted. Income tax is a important source of revenue for the government, contributing around 50% of the total tax revenue in India.
10. Which among the following programmes is NOT being implemented in India with assistance of World Bank?
[A] National Vector Borne Disease Control and Polio Eradication
[B] National Rural Livelihoods Project
[C] PMGSY Rural Roads Project
[D] Delhi Mumbai Industrial Corridor Project
Show Answer
Correct Answer: D [Delhi Mumbai Industrial Corridor Project]
Notes:
The Delhi-Mumbai Industrial Corridor Project is primarily a government initiative aimed at developing infrastructure and industrial growth between Delhi and Mumbai. While it may receive various forms of investment, it is not directly implemented with World Bank assistance, unlike the other programs listed, which focus on health and rural development. The National Vector Borne Disease Control and Polio Eradication programs are supported by the World Bank to enhance public health, and the PMGSY (Pradhan Mantri Gram Sadak Yojana) aims to improve rural road connectivity with World Bank funding. The National Rural Livelihoods Project also receives World Bank support to reduce poverty through sustainable livelihoods.
