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. In the capital market, simultaneous purchase and sale of securities to reduce the loss on purchase is known as __?
[A] Arbitrage
[B] Hedging
[C] Trend following
[D] Shorting
Show Answer
Correct Answer: A [Arbitrage]
Notes:
Arbitrage is a type of trade in which a security is simultaneously bought and sold, in different markets. This type of trade takes advantage of the difference in prices of the same financial instrument being offered on different exchanges.
2. Who among the following is called father of Economics?
[A] David Hume
[B] Lamarck
[C] Adam Smith
[D] John Stuart Mill
Show Answer
Correct Answer: C [Adam Smith]
Notes:
Adam smith is considered as father of Modern Economics. In his book “The nature & causes of wealth of the Nation’s 1776, he has described economics as science of wealth. According to him economy is the study of wealth only and it deals with its production and consumption. Only material goods which are scarce and useful are wealth.
3. In which five year plan self-reliance as an object of planning was emphasized?
[A] First Five Year Plan
[B] Second Five Year Plan
[C] Third Five Year Plan
[D] Fourth Five Year Plan
Show Answer
Correct Answer: D [Fourth Five Year Plan]
Notes:
The Fourth Five-year plan was implemented during 1969 to 1974 in India. The plan has twin objectives of “Growth with stability” and “progressive achievement of self-reliance”. It focused on the growth rate of Agriculture.
4. The concept of weaker sections under ‘priority sector’ was introduced on the recommendation of which of the following committees?
[A] Krishnaswami Committee
[B] Varshney Committee
[C] Gadgil Committee
[D] Abid Hussain Committee
Show Answer
Correct Answer: A [Krishnaswami Committee]
Notes:
The term Priority Sector Lending was defined in the year 1972 by Krishnaswamy Committee. Initially banks were given an Priority sector lending target of 33.33%. But following the Krishnaswami Committee’s recommendations, the targets were raised to 40%.
5. A new private bank in India is licensed under which act?
[A] Banking Regulation Act 1949
[B] Companies Act 2013
[C] RBI Act 1934
[D] Banking Companies (Acquisition and Transfer) Act 1970
Show Answer
Correct Answer: A [Banking Regulation Act 1949]
Notes:
A private bank in India can begin banking operations only after obtaining a licence from the Reserve Bank of India under Section 22 of the Banking Regulation Act, 1949. The company may be incorporated under the Companies Act, 2013, but the authority that governs the grant of banking licence is the Banking Regulation Act. Hence, the correct answer is Banking Regulation Act, 1949.
6. Which is called the “Soft Loan Window” of the World Bank?
[A] International Monetary Fund
[B] International Finance Corporation
[C] International Development Association
[D] World Trade Organization
Show Answer
Correct Answer: C [International Development Association]
Notes:
The International Development Association (IDA) was established in 1960 as part of the World Bank Group. IDA offers highly concessional loans and grants to the world’s poorest countries. As of fiscal year 2025, IDA has provided $600 billion to 116 countries. Its concessional loans typically have repayment periods of up to 40 years with long grace periods and low or zero interest.
7. The secondary market deals in which of the following?
[A] Only newly issued securities
[B] Only government bonds and certificates of deposit
[C] Securities already issued and previously traded
[D] Only short-term trading instruments
Show Answer
Correct Answer: C [Securities already issued and previously traded]
Notes:
The secondary market is for trading securities that have already been issued. Transactions involve investors buying and selling among themselves. The issuing company does not receive any funds from these trades. Major examples include stock exchanges like NYSE and NASDAQ. The market provides liquidity and facilitates price discovery for already existing securities including shares, bonds, and debentures.
8. 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.
9. Consider the following statements regarding Cost Push Inflation:
- Cost Push Inflation is a function of the costs such as wages, rent, interest rates etc.
- Cost Push Inflation can be controlled easily in comparison to Demand Pull Inflation.
- The purchasing power of Rupee decreases in case of Cost Push Inflation.
- Cost Push Inflation often results from supply shocks like oil price increases.
Which of the above statements is / are correct?
[A] 1, 3 and 4
[B] Only 1
[C] 1 and 2
[D] 2 and 3
Show Answer
Correct Answer: A [1, 3 and 4]
Notes:
Cost-push inflation arises from increases in production costs like wages and raw materials (statement 1). It cannot be controlled easily compared to demand-pull inflation (statement 2 is incorrect). Inflation reduces the purchasing power of money (statement 3). Supply shocks, e.g., rising oil prices, often trigger cost-push inflation (statement 4). Thus, 1, 3, and 4 are correct.
10. Which of the following bodies procures, distributes, exports and imports agricultural commodities?
[A] FCI
[B] NAFED
[C] NABARD
[D] All of them
Show Answer
Correct Answer: B [ NAFED ]
Notes:
NAFED is the apex body in cooperative sector and deals in procurement , distribution, export and import of selected agricultural commodities.
