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 of the following pairings does not represent a set of complementary goods?
[A] Printers and Ink Cartridges
[B] Tea and Sugar
[C] Mobile Phones and SIM cards
[D] Tea and Coffee
Show Answer
Correct Answer: D [Tea and Coffee]
Notes:
Complementary goods, defined by their negative cross elasticity of demand, are products whose demand is influenced by one another. When the price of a good declines, the demand for its complementary good rises. Printers need ink cartridges, tea is often consumed with sugar, and mobile phones require SIM cards for operation. However, tea and coffee are substitutes, not complements, as they are consumed separately and often in place of one another, hence they are not complementary goods.
2. National Rural Credit Stabilization Fund is a Institution of purpose-specific funds in which of the following?
[A] IDBI
[B] SIDBI
[C] IFCI
[D] NABARD
Show Answer
Correct Answer: D [NABARD]
Notes:
The National Rural Credit stabilization fund is a sector specific finds maintained with National Bank for Agriculture and Rural Development. This fund includes contributions from Central and State Governments, sums contributed by RBI and the sums contributed by NABARD’s board every year.
3. In which of the following actions will be taken by Reserve bank of India, to curb the excess liquidity, when the deficit financing increases?
[A] Increases CRR
[B] Decreases Bank rate
[C] Resorts to open market operations
[D] Raises the Tax rates
Show Answer
Correct Answer: A [Increases CRR]
Notes:
RBI can reduce the excess liquidity by using the liquidity adjustment facility to manage high levels of inflation. This can be done by increasing the repo rate or cash reserve ratio. This will reduce the money supply in India’s economy.
4. Which among the following does not come under the monetary policy for regulating the economy?
[A] Discount rate
[B] Government spending
[C] reserve requirement
[D] Open market Operations
Show Answer
Correct Answer: B [Government spending]
Notes:
Government spending refers to the money spent by the government or public sector on the acquisition of goods and services such as education, healthcare, social protection, defence etc. It does not come under monetary policy.
5. Note Printing Press that belongs to RBI is located in?
[A] Nasik
[B] Dewas
[C] Mysore
[D] Chennai
Show Answer
Correct Answer: C [Mysore]
Notes:
The Reserve Bank of India (RBI) has two currency printing presses in India: Mysore, Karnataka and Salboni, West Bengal.
The RBI’s presses are owned by Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL), a subsidiary of the Reserve Bank. The other two currency presses in India are owned by the government and are located in Nasik and Dewas.
6. Interests payable on savings bank accounts in India is ___
[A] Not regulated
[B] Regulated by RBI
[C] Regulated by Central Government
[D] Regulated by State Governments
Show Answer
Correct Answer: A [Not regulated]
Notes:
In India, interest rates on savings bank accounts are not regulated by any government body. Instead, they are determined by individual banks based on their own policies and market conditions. The Reserve Bank of India (RBI) provides guidelines but does not set specific rates. This allows banks to compete for deposits, leading to varying interest rates across institutions.
7. If the Reserve Bank of India wants to increase the Cash Reserves commercial Banks, which among the following would be the most probable step taken by it ?
[A] Release Gold from its reserves
[B] Buy bonds in the open market
[C] Prohibit the transactions that involve bill of exchange
[D] Increase the tranche reserves with the IMF
Show Answer
Correct Answer: B [Buy bonds in the open market]
Notes:
When RBI buys bonds in the open market, Banks get money and Cash Reserves would increase.
8. Which among the following is a qualitative tool of monetary policy?
[A] Bank Rate
[B] Credit Ceiling
[C] Credit rationing
[D] Cash Reserve Ratio
Show Answer
Correct Answer: C [Credit rationing ]
Notes:
The quantitative instruments are Open Market Operations, Liquidity Adjustment Facility (Repo and Reverse Repo), Marginal Standing Facility, SLR, CRR, Bank Rate, Credit Ceiling etc.
On the other hand, qualitative instruments are: credit rationing, moral suasion and direct action (by RBI on banks).
9. Which among the following is NOT a subsidiary of RBI?
[A] National Housing Bank
[B] NABARD
[C] Bharatiya Reserve Bank Note Mudran Private Limited
[D] SIDBI
Show Answer
Correct Answer: D [SIDBI ]
Notes:
RBI has four subsidiaries viz. Deposit Insurance and Credit Guarantee Corporation, DICGC; National Housing Bank; Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL) and NABARD.
10. What total fertility rate is required to just replace the world’s existing population?
[A] 1.0
[B] 1.1
[C] 2.0
[D] 2.1
Show Answer
Correct Answer: D [ 2.1 ]
Notes:
Demographers have estimated that on a global scale, replacement-level fertility implies a total fertility rate of about 2.1, taking into account that some women never have children.However, replacement-level fertility in less developed countries is higher because ofhigher rates of mortality among children and young adults of childbearing age. The total fertility rate worldwide is about 2.52. Thus births continue to outnumber deaths and the world’s population is expected to continue to increase during the foreseeable future .
