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 correctly denotes Reserve Money?
[A] Currency in circulation
[B] Currency in Circulation + Other deposits of the General Public with RBI
[C] Currency in circulation + Other deposits of the general Public with RBI + Cash held with the banks
[D] Currency in circulation + Other deposits of the general Public with RBI + Cash held with the banks + Banker’s Deposits with RBI
Show Answer
Correct Answer: D [Currency in circulation + Other deposits of the general Public with RBI + Cash held with the banks + Banker’s Deposits with RBI]
Notes:
Reserve money is also called High Powered Money / central bank money. It is the Currency in Circulation plus Deposits of Commercial Banks with RBI.
2. Which among the following body in India requires to protect the interests of consumers against anti-competitive practices of all market entities?
[A] National Consumer Forum
[B] Competition Commission of India
[C] National Consumer Disputes Redressal Commission
[D] Central Vigilance Commission
Show Answer
Correct Answer: B [Competition Commission of India]
Notes:
The Competition Commission of India (CCI) was set up to replace the anachronistic Monopolies and Restrictive Trade Practices Commission (MRTPC). It was established to eliminate practices that adversely affect competition in different industries/areas and protect interests of consumers and ensure freedom of trade. The Competition Act of 2002 called for the creation of CCI. However, it was established in 2003 and became fully functional only by 2009. The CCI is a quasi-judicial body which gives opinions to statutory authorities and also deals with other cases. It has one chairman and six members. It is the youngest and the only cross-sector regulator in India.
3. Which option best demonstrates cross-selling in a sales scenario?
[A] A salesperson suggests a premium whisky with local liquor.
[B] A fast-food worker offers fries with a sandwich order.
[C] A salesperson suggests a pricier laptop with upgrades.
[D] A salesperson offers in-car floor liners with a car purchase.
Show Answer
Correct Answer: B [A fast-food worker offers fries with a sandwich order.]
Notes:
Cross-selling involves suggesting additional complementary products to a customer’s original purchase. In fast-food chains, offering fries with a sandwich exemplifies this. According to retail practices adopted since the 1970s, cross-selling combos are widely used to increase overall sales figures. Major restaurant chains such as McDonald’s and Burger King commonly use this technique globally.
4. Wage-price spirals are linked to which type of inflation?
[A] Demand-pull inflation
[B] Cost-push inflation
[C] Deflation
[D] Stagflation
Show Answer
Correct Answer: B [Cost-push inflation]
Notes:
A wage-price spiral occurs when rising wages increase production costs leading to higher prices, which then prompt further wage demands. This describes cost-push inflation. Cost-push inflation is driven by increased costs of inputs such as wages and raw materials. During the 1970s, wage-price spirals contributed to persistent inflation in many developed countries due to frequent labor market adjustments and price hikes.
5. Who among the following was the architect of second five year plan ?
[A] Jawahar Lal Nehru
[B] C D Deshmukh
[C] P C Mahalanobis
[D] Subimal Datt
Show Answer
Correct Answer: C [P C Mahalanobis]
Notes:
Prasantha Chandra Mahalanobis or P. C. Mahalanobis (1893-1972) was the first Indian statistician to receive world recognition. In 1933, Mahalanobis founded the first Indian statistical journal Sankhya, along the lines of Biometrika, which had inspired him greatly. He was architect of India’s second five year plan and due to this second plan is known as Mahalanobis model.
6. Who among the following works as head of the “Board for Financial Supervision” in India?
[A] Finance Minister
[B] RBI Governor
[C] Minister of State for Finance
[D] Independent head appointed by President
Show Answer
Correct Answer: B [RBI Governor]
Notes:
The head of the “Board for Financial Supervision” (BFS) in India is the RBI Governor. Established in 1994, the BFS is responsible for overseeing the financial system, ensuring its stability and soundness. The Reserve Bank of India (RBI) plays a crucial role in regulating the banking sector, and the Governor, as the chief executive, leads this board.
7. In finance, what do Fixed to Floating and Floating to Floating refer to?
[A] Interest rates
[B] Swaps
[C] Foreign exchange rates
[D] Derivative contracts
Show Answer
Correct Answer: B [Swaps]
Notes:
Fixed to Floating and Floating to Floating describe interest rate swaps, which are derivative contracts exchanging fixed and floating interest payments. Interest rate swaps, including vanilla and basis swaps, are widely used for hedging and managing interest rate risk. Basis swaps exchange floating rates based on different benchmarks. These swaps play a major role in global financial markets and are commonly used by banks and corporations.
8. Which of these is NOT an anti-inflationary monetary measure?
[A] Increasing central bank discount rate
[B] Raising Cash Reserve Ratio
[C] Implementing credit rationing policies
[D] Open market purchase of government securities
Show Answer
Correct Answer: D [Open market purchase of government securities]
Notes:
Open market purchase of government securities injects liquidity into the banking system. The Reserve Bank of India buys government securities to increase money supply. This is an expansionary policy used to stimulate economic growth. Anti-inflationary measures contract money supply. RBI uses open market sales, not purchases, to control inflation. Open market operations are conducted under Section 17 of the Reserve Bank of India Act, 1934.
9. What drives economic growth in the MENA region in 2026?
[A] Tourism and hospitality services
[B] Oil production and hydrocarbon exports
[C] Manufacturing and industrial production
[D] Data center and AI technology development
Show Answer
Correct Answer: B [Oil production and hydrocarbon exports]
Notes:
In 2026, oil production and hydrocarbon exports remain the main growth drivers for the MENA region, especially within GCC states. Despite efforts toward economic diversification in areas like AI and tourism, hydrocarbons still overwhelmingly contribute to real GDP growth and export revenues in the region.
10. Which is NOT an anti-inflationary measure by the central bank?
[A] Raising the Bank Rates
[B] Raising Reserve Ratio Requirements
[C] Rationing of Credit
[D] Purchase of securities in Open Markets
Show Answer
Correct Answer: D [Purchase of securities in Open Markets]
Notes:
The Reserve Bank of India purchases government securities in open market operations to increase liquidity in the banking system. Increased liquidity leads to higher money supply in the economy. Higher money supply may lower interest rates and promote borrowing. This process is utilized to support economic growth and is considered an expansionary monetary policy. Open market purchase of securities is not used to control inflation.