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. Where do the Commercial Banks keep the liquid assets under the Statutory Liquidity Ratio?
[A] With RBI
[B] With other banks
[C] In the Market
[D] With Themselves
Show Answer
Correct Answer: D [With Themselves]
Notes:
Banks in India are required to maintain a specified minimum Statutory Liquidity Ratio (SLR) of their net demand and time liabilities in the form of liquid assets like cash, gold or approved securities. The liquid assets under SLR are kept by the banks themselves in their own custody.
2. Interest Rate Policy is a part of which of the following?
[A] Fiscal Policy
[B] Monetary policy
[C] Industrial Policy
[D] All the above
Show Answer
Correct Answer: B [Monetary policy]
Notes:
Monetary policy is a tool adopted by the central bank of a nation to control either the interest rates and the money supply in the economy. It is mostly used to give a direct impact on inflation, price stability and stability of the nation’s currency
3. Which among the following body in India takes actions against violations & irregularities in foreign currency convertible bonds?
[A] Securities and Exchange Board of India
[B] Reserve Bank of India
[C] Foreign Investment Promotion Board
[D] National Stock Exchange
Show Answer
Correct Answer: B [Reserve Bank of India]
Notes:
The correct answer is the Reserve Bank of India (RBI). The RBI regulates foreign exchange under the Foreign Exchange Management Act (FEMA) of 1999. It oversees transactions involving foreign currency convertible bonds (FCCBs) to ensure compliance with foreign exchange laws. The RBI’s role includes monitoring and taking action against violations related to foreign investments and currency regulations.
4. Which among the following is one among the five indicators used by the United Nations Development Programme in its annual Human Development Report for Gender related standard of living?
[A] Gender Development Index
[B] Gender Empowerment Index
[C] Gender Empowerment Measure
[D] Gender Parity Index
Show Answer
Correct Answer: A [Gender Development Index]
Notes:
The correct answer is Gender Development Index (GDI). The GDI is one of the five indicators used by the United Nations Development Programme (UNDP) to assess gender disparities in human development. It measures the differences in human development achievements between women and men, focusing on life expectancy, education, and income. The GDI was introduced in the 1995 Human Development Report to highlight gender inequalities in development.
5. Which among the following rates play most important role in sucking out the liquidity in the system?
[A] Repo Rate
[B] Cash Reserve Ratio
[C] Prime Lending Rate
[D] BPLR
Show Answer
Correct Answer: B [Cash Reserve Ratio]
Notes:
Some of the major tools to suck the excess liquidity out of the system standing deposit facility (SDF), narrowing the liquidity adjustment facility (LAF), increase repo rate, cash reserve ratio etc.
6. Which among the following authority appoints a Deputy Governor in Reserve Bank of India?
[A] Governor of RBI
[B] Central Board of Directors
[C] Central Government
[D] Committee of the Central Board
Show Answer
Correct Answer: C [Central Government]
Notes:
The correct answer is “Central Government.” In India, the Deputy Governors of the Reserve Bank of India (RBI) are appointed by the Central Government under Section 8 of the Reserve Bank of India Act, 1934. The RBI has four Deputy Governors, and their roles include overseeing various departments such as monetary policy, financial markets, and banking regulation. This appointment process reflects the government’s influence on the central bank’s operations.
7. Which among the following is the chief characteristic of the primary industry of the developed countries?
[A] Larger farm size and increasing corporate ownership of farms
[B] Larger farm size and more government ownership of farms
[C] Smaller farm size and a diversity of crops on each farm
[D] Smaller farm size and fewer family-owned farms
Show Answer
Correct Answer: A [Larger farm size and increasing corporate ownership of farms]
Notes:
Consider agriculture in the developed countries such as United States and Canada. There, the small family farms are not able to earn a profit and are being replaced by large corporate farms.
8. Which of the following is the correct definition of ‘Effective Revenue Deficit’?
[A] difference between revenue deficit and grants for creation of capital assets
[B] difference between revenue deficit and interest liabilities of the Government
[C] difference between fiscal receipt and net expenditure of the government
[D] difference between fiscal receipt and money spent on various social services
Show Answer
Correct Answer: A [ difference between revenue deficit and grants for creation of capital assets ]
Notes:
Effective Revenue Deficit is the difference between revenue deficit and grants for creation of capital assets.
9. Which among the following is the guiding principle of the concept of most favoured nations?
[A] that every nation has a preferred trading partner
[B] that nations should cooperate with other nations that cooperate with them
[C] non-discrimination among trading partners
[D] that each nation should be able to decide what other nations it prefers as trading partners
Show Answer
Correct Answer: C [ non-discrimination among trading partners ]
Notes:
The guiding principle of the Most Favoured Nation (MFN) concept is “non-discrimination among trading partners.” This principle, established in international trade agreements, ensures that any favorable trading terms offered by one country to another must be extended to all other trading partners. This concept is a cornerstone of the World Trade Organization (WTO) framework, promoting equality and preventing trade discrimination. The MFN principle aims to create a level playing field in international trade, fostering global economic cooperation.
10. Which of the following is the distribution of the burden of paying a tax?
[A] Sharing of tax burden
[B] Shifting of the tax
[C] Incidence of a tax
[D] Tax capitalization
Show Answer
Correct Answer: C [Incidence of a tax]
Notes:
In economics, tax incidence or tax burden is the effect of a particular tax on the distribution of economic welfare. The introduction of a tax drives a wedge between the price consumers pay and the price producers receive for a product, which typically imposes an economic burden on both producers and consumers.
