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 would most likely follow if the Reserve Bank of India effects selling of the securities?
[A] The cash resources at the disposal of the commercial banks increase.
[B] The cash resources at the disposal of the commercial banks get diminished.
[C] The cash resources of the commercial banks remain unchanged
[D] None of the above
Show Answer
Correct Answer: B [The cash resources at the disposal of the commercial banks get diminished.]
Notes:
The Reserve Bank of India starts selling the Government Securities, on behalf of the Government. Either the commercial banks or retail investors buy the securities, resulting in decrease of cash resources at the disposal of the commercial banks.
2. Which is the largest source of irrigation in India after rainfall?
[A] Canals
[B] Rivers
[C] Tanks
[D] Tubewells
Show Answer
Correct Answer: D [Tubewells]
Notes:
Tubewells provide the highest share of irrigation among artificial sources in India after rainfall. According to the 2015-16 Agricultural Census, tubewells accounted for about 46% of the net irrigated area. Tubewell irrigation is most prevalent in northern Indian states such as Uttar Pradesh and Punjab. Canals, rivers, and tanks contribute comparatively less to the total irrigated area.
3. Which best defines Gross Budgetary Support?
[A] Value of gross revenue receipts by the government
[B] Fraction of total expenditure on Central sectors, ministries, and State/UT plans
[C] Value of total plan expenditure
[D] Fraction of expenditure on different Central sectors plans
Show Answer
Correct Answer: B [Fraction of total expenditure on Central sectors, ministries, and State/UT plans]
Notes:
Gross Budgetary Support is the portion of the government budget allocated to central sectors, ministries, departments, and as support to State/UT plans. It forms a part of the total expenditure in India’s Union Budget. GBS funds plan expenditures and is used for the implementation of schemes and programs under different government ministries and departments. It is released annually by the Government of India.
4. What percent of India’s external debt did ECBs comprise by March 2025?
[A] Decreased due to multilateral borrowing
[B] Nearly 40%, the largest component
[C] Remained constant at 27%
[D] Replaced by NRI deposits
Show Answer
Correct Answer: B [Nearly 40%, the largest component]
Notes:
By end-March 2025, external commercial borrowings formed 39.6% of India’s total external debt. Outstanding ECBs reached $291.6 billion, a 16.4% increase from the previous year. ECBs surpassed other categories, becoming the single largest component of India’s external debt until 2025. ECBs are medium or long-term loans raised from abroad by Indian companies.
5. Which among the following was the main objective of the Fiscal Responsibility and Budget Management Act, 2003?
[A] Achieve Fiscal Surplus
[B] Eliminate Revenue deficit
[C] Eliminate Fiscal Deficit
[D] Stop Money Laundering
Show Answer
Correct Answer: B [Eliminate Revenue deficit]
Notes:
The main objective of the Fiscal Responsibility and Budget Management (FRBM) Act, 2003, was to eliminate the revenue deficit. This act aimed to ensure fiscal discipline by setting targets for the government to reduce its fiscal deficit and improve the overall financial health of the economy. The act mandates the government to present a medium-term fiscal policy and aims to enhance transparency in fiscal operations. It was introduced in response to rising fiscal deficits in the late 1990s and early 2000s, which posed risks to economic stability.
6. Which is not an indirect tax?
[A] Corporation Tax
[B] Goods and Services Tax (GST)
[C] Customs Duty
[D] Excise Duty
Show Answer
Correct Answer: A [Corporation Tax]
Notes:
Corporation Tax is a direct tax imposed on the net income or profit of corporations and paid directly by companies to the government. Goods and Services Tax, Customs Duty, and Excise Duty are indirect taxes collected from consumers by intermediaries. The corporate tax rate in India for domestic companies was reduced to 22 percent in 2019.
7. 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.
8. The Consumer Welfare Fund is mainly financed through which source?
[A] Excise duty on manufactured goods
[B] Mandatory business contributions
[C] Unclaimed duty refunds and unused indirect tax
[D] Voluntary consumer donations
Show Answer
Correct Answer: C [Unclaimed duty refunds and unused indirect tax]
Notes:
The Consumer Welfare Fund was established under Section 57 of the CGST Act, 2017. Its main sources are unclaimed duty refunds under Central Excise and Customs Acts and unutilized indirect tax amounts not refundable to individuals. Receipts under GST, including unclaimed tax refunds, also finance the fund. The Department of Consumer Affairs administers the fund.
9. Which organization publishes the Inclusive Growth and Development Report?
[A] World Bank
[B] International Monetary Fund
[C] World Economic Forum
[D] Organisation for Economic Cooperation and Development
Show Answer
Correct Answer: C [World Economic Forum]
Notes:
The World Economic Forum publishes the Inclusive Growth and Development Report. The Inclusive Development Index was introduced with this report in 2017. The report evaluates economies using parameters like education, employment, labor compensation, and social protection. The World Economic Forum is headquartered in Geneva, Switzerland, and began the series under its System Initiative on Economic Growth and Social Inclusion.
10.
If a company declares a 100% dividend, the shareholder will get an amount equal to the ___
[A]
Face Value of the Share
[B]
Market Value of the Share
[C]
Previous dividend announced
[D]
Face Value or Market Value, whichever is higher
Show Answer
Correct Answer: A [
Face Value of the Share
]
Notes:
Dividend is the portion of profits that a company distributes among its shareholders in the form of cash. Usually it is expressed per share. In some cases it is expressed as a percentage of the share’s face value. So if your company declares a 100% dividend, you will get an amount equal to the face value of the share and not equal to its market price. When dividend is expressed in percentage terms, it is the face value that is referred to. The same holds good when it comes to dividends declared by mutual funds — it is the par value of units that is considered — which usually stands at Rs 10.
