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. These questions are part of GKToday’s 35000+ MCQs Bank Course in GKToday Android App
1. Which of the following was the first paper currency issued by RBI?
[A] Rs 1-Note
[B] Rs 2-Note
[C] Rs 5 Note
[D] Rs 100 Note
Show Answer
Correct Answer: C [Rs 5 Note]
Notes:
The Rs 5-note was the first paper currency issued by RBI in January 1938. The Reserve Bank of India (RBI) is India’s central banking institution, which controls the monetary policy of the Indian rupee. It commenced its operations on 1 April 1935 during the British Rule in accordance with the provisions of the Reserve Bank of India Act, 1934.
2. The Government of India is planning to allow 200,000 tones of duty-free sugar imports. Which of the following is a correct statement about Sugar production and consumption of sugar in India?
[A] India is world’s largest sugar producer
[B] India is world’s largest sugar consumer
[C] India’s largest sugar producing state is Uttar Pradesh
[D] Sugar farming in India is concentrated in Deccan peninsula only.
Show Answer
Correct Answer: B [ India is world’s largest sugar consumer ]
Notes:
Rest of the three statements are incorrect. India is largest consumer but largest producer of sugar is Brazil. India’s largest sugar producing state is Maharashtra while sugarcane is produced in maximum quantity in UP. Sugar farming is not concentrated in Deccan peninsula.
3. Which among the following is a suitable term for the state of economy in which economic activity is slowing down but wages and prices continue to rise ?
[A] Inflation
[B] Deflation
[C] Skweflation
[D] Stagflation
Show Answer
Correct Answer: D [Stagflation]
Notes:
Stagflation refers to persistent high inflation coupled with high unemployment and stagnant demand /growth in economy.
High Inflation + Low Economic Growth {or conditions of recession} + Low Employment Generation = Stagflation
4. Which among the following correctly categorizes Collateralized Borrowing and Lending Obligation?
[A] A market operation
[B] A money market instrument
[C] A clearing system
[D] A Scheme of Reserve Bank of India
Show Answer
Correct Answer: B [A money market instrument]
5. Which among the following plan document has a subtitle ” Inclusive growth” ?
[A] 10th Five year Plan
[B] 11th Five year Plan
[C] National Solar Mission
[D] Bhart Nirman
Show Answer
Correct Answer: B [11th Five year Plan]
6. In context with the banking business, which among the following is a correct definition of liquidity risk?
[A] Risk arising from funding of long term assets by short term liabilities or funding of short term assets by long term liabilities
[B] Risk arising from adverse movement of interest rates during a liquidity crunch in the markets
[C] Risk arising from the adverse movement of the value of the assets /investments etc.
[D] Risk arising from a party becoming defaulter
Show Answer
Correct Answer: A [Risk arising from funding of long term assets by short term liabilities or funding of short term assets by long term liabilities]
7. For the first time in India, in which of the following Budgets “basic reforms in the international financial and trading system ” was stressed in India?
[A] 1969
[B] 1980
[C] 1983
[D] 1984
Show Answer
8. Which among the following are two maximum revenue yielding groups of Indirect taxes in India?
[A] Custom and General Sales Tax
[B] Union Excise Duties and General Sales tax
[C] Union Excise Duties and Customs
[D] Union Excise duties and state Excise duties
Show Answer
Correct Answer: B [Union Excise Duties and General Sales tax]
9. Consider the following:
- Minor Irrigation Scheme: CCA less than 2000 Hectares
- Medium Irrigation Scheme : CCA more than 2000 Hectares but less than 10000 Hectares
- Major Irrigation Scheme : CCA more than 10000 Hectares
Which among the above statements is / are correct?
[A] Only 1 and 2 are correct
[B] Only 2 and 3 are correct
[C] all are correct
[D] all are incorrect
Show Answer
Correct Answer: C [all are correct]
Notes:Various irrigation schemes in India were classified by the erstwhile planning commission into three parts viz. Minor, Medium and Major Irrigation schemes.
- Major irrigation Scheme: Major irrigation schemes are those schemes which have a Culturable Command Areas of More than 10,000 hectares.
- Medium irrigation Schemes: The Medium Irrigation Schemes have a CCA of 2,000-10,000 hectares.
- Minor Schemes: Those with Culturable command areas up to 2000 hectares.
Cultural command area is the basis for the design of water course and basis for the design of an irrigation project. It is the proportion of the Gross Command Area which is Culturable and cultivable.
10. It has been generally viewed that when an economy grows beyond its potential growth rate, it causes inflation. How does growing faster than the potential rate cause inflation?
[A] Fast growth causes quick resource utilization to fulfill the higher demand
[B] Fast growth causes more employment opportunities which leads to rise in prices
[C] Fast growth causes more productivity which leads to higher supply and cost push inflation
[D] All of above mentioned reasons
Show Answer
Correct Answer: A [Fast growth causes quick resource utilization to fulfill the higher demand]
Notes:
There are two major determinants of the potential rate at which an economy can grow in the long run. One is the rate of increase in key inputs such as labour and capital, while the other is the rise in productivity. Within the two key inputs, labour has a bigger say in determining the potential growth rate. The increase in labour supply – through an increase in number of workers or the numbers of hours put by a given number of workers – and an increase in labour productivity will result in an increase in the long-term potential growth rate. Anything that aids productivity increases can help boost potential growth rate. Infrastructure investments and skilling of labour can raise India’s potential growth rate because the country has ample labour supply. The overall demand in the economy picks up due to fast growth and more resources are used to meet higher demand. After a point, the economy may not find enough inputs to meet the demand, leading to an increase in prices. If there is surplus capacity in the economy then it can grow above the potential rate for a while. But for an economy already working at full capacity, excessive demand results in increase in the price level.
