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 bank’s stock is excluded from Bank NIFTY as of February 2026?
[A] Bank of India
[B] Kotak Mahindra Bank
[C] Punjab National Bank
[D] Yes Bank
Show Answer
Correct Answer: A [Bank of India]
Notes:
Bank NIFTY is an index that includes 14 of the most liquid and large-cap Indian banking stocks as of February 2026. The constituents are HDFC Bank Ltd. (22.02%), ICICI Bank Ltd. (18.18%), State Bank of India (10.42%), Axis Bank Ltd. (10.05%), Kotak Mahindra Bank Ltd. (8.85%), Federal Bank Ltd. (5.02%), IndusInd Bank Ltd. (4.15%), Bank of Baroda (3.86%), IDFC First Bank Ltd. (3.78%), AU Small Finance Bank Ltd. (3.76%). Bank of India is excluded.
2. Who is the ex-officio Chairperson of the Monetary Policy Committee (MPC)?
[A] The Finance Minister of India
[B] The Deputy Governor of RBI
[C] Secretary, Department of Economic Affairs
[D] Governor of Reserve Bank of India
Show Answer
Correct Answer: D [Governor of Reserve Bank of India]
Notes:
The Monetary Policy Committee was formed in 2016 after an amendment to the RBI Act, 1934. The Committee consists of six members: three from the Reserve Bank of India and three nominated by the Central Government. The Governor of the Reserve Bank of India is designated as the ex-officio Chairperson of the Monetary Policy Committee.
3. Which among the following is an anti-inflationary measure?
[A] Stagflation
[B] Hyper inflation
[C] Disinflation
[D] Deflation
Show Answer
Correct Answer: C [Disinflation]
Notes:
Disinflation means the decrease in the rate of inflation. It is a slowdown in the rate of increase of price levels of goods and services. This is different from deflation, in the way that Disinflation is only a marginal and short term decrease in rate of inflation.
4. Unclaimed deposits are those not operated for how many years?
[A] 5 years or more
[B] 3 years or more
[C] 7 years or more
[D] 10 years or more
Show Answer
Correct Answer: A [5 years or more]
Notes:
Under the Banking Regulation Act, 1949, unclaimed deposits are defined as funds not operated for 10 years in India but commonly considered 5 years under US state dormancy laws. Indian Reserve Bank amendments in 2014 require banks to transfer such amounts to the Depositor Education and Awareness Fund after 10 years.
5. Which tools and goals define fiscal policy?
[A] Managing interest rates and money supply
[B] Taxation and government spending to influence economy
[C] Open market operations for bank reserves
[D] Setting reserve requirements for banks
Show Answer
Correct Answer: B [Taxation and government spending to influence economy]
Notes:
Fiscal policy uses government taxation and spending to affect economic growth, employment, and inflation. Main tools are tax adjustments and expenditure management. These decisions are made through the government’s annual budget process. Fiscal policy is distinguished from monetary policy, which is implemented by central banks using instruments such as interest rates, reserve requirements, and open market operations.
6. What is Collateralized Borrowing and Lending Obligation (CBLO) in banking?
[A] An export financing scheme requiring specific borrower obligations
[B] A central bank facility for state government short-term lending
[C] A CCIL-developed, RBI-approved money market instrument for collateralized borrowing and lending
[D] A derivative instrument for trading in currency and commodity futures
Show Answer
Correct Answer: C [A CCIL-developed, RBI-approved money market instrument for collateralized borrowing and lending]
Notes:
Collateralized Borrowing and Lending Obligation (CBLO) was introduced in India in 2003. It is a money market instrument developed by the Clearing Corporation of India Limited (CCIL) and approved by the Reserve Bank of India. CBLO facilitates collateralized borrowing and lending among financial institutions by using government securities as collateral and operates under the RBI’s regulatory framework, with maturity periods from one day to one year.
7. Which among the following curve defines the principle that zero tax rate would produce zero revenue for the government and a 100% tax rate would also generate zero revenue for the taxing Government?
[A] Laffer curve
[B] Lorenz curve
[C] Engel curve
[D] Kuznets curve
Show Answer
Correct Answer: A [Laffer curve]
Notes:
The Laffer curve is a theoretical concept in economics that illustrates the relationship between tax rates and government revenue. The curve is named after economist Arthur Laffer, who popularized the concept in the 1970s. The basic idea behind the Laffer curve is that there is a certain tax rate that will maximize government revenue. At a 0% tax rate, the government will obviously not collect any revenue. At a 100% tax rate, the government will also not collect any revenue because people will have no incentive to work. The Laffer curve suggests that there is a point in between these two extremes where the government will collect the most revenue. The exact shape and location of the Laffer curve will vary depending on various factors, such as the state of the economy and the efficiency of the government’s tax collection system.
8. Approval of which among the following is needed to draw funds from Consolidated Fund of India?
[A] President
[B] Parliament
[C] Council of Ministers
[D] All the above
Show Answer
Correct Answer: B [Parliament]
Notes:
The Consolidated Fund of India was created under Article 266 of the Indian Constitution. The government meets all its expenditure from this fund and it needs parliamentary approval to withdraw money from this fund.
9. Which Indian state is the largest producer of raw silk?
[A] Bihar
[B] West Bengal
[C] Assam
[D] Karnataka
Show Answer
Correct Answer: D [Karnataka]
Notes:
Karnataka produced 13,278 tonnes of raw silk in 2024-25, about 32% of India’s total. The state contributes approximately 45% of India’s mulberry silk. Major silk-producing districts are Mandya, Kolar, Chikkaballapur, and Ramanagara. Silk cultivation in Karnataka covers about 1.2 lakh hectares. The Silk Samagra-2 scheme supports sericulture in the state.
10. The business transactions done in lieu of which of the following would be called Invisible Trade?
- Consulting
- Income from foreign investment
- Shipping services
- Tourism
Select the correct option from the codes given below:
[A] Only 1 & 2
[B] Only 2 & 3
[C] Only 3 & 4
[D] 1, 2, 3 & 4
Show Answer
Correct Answer: D [ 1, 2, 3 & 4 ]
Notes:
Business transactions that occur with no exchange of tangible goods called Invisible Trade. It involves the transfer of non-tangible goods and/or service, intellectual property and patents. Examples of invisible trade including consulting, income from foreign investment, shipping services and tourism.