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. Export of which of the following is an Invisible Export?
[A] Services
[B] Prohibited goods
[C] Unrecorded goods
[D] Goods through smuggling
Show Answer
Correct Answer: A [ Services ]
Notes:
Any export that does not have a tangible physical presence (e.g. expertise, insurance underwriting). Here, Invisible Export means export of Services
2. Bank Rate is defined as the rate at which:
[A] RBI lends short term loans to commercial banks
[B] a commercial bank can lend to its customers
[C] RBI lends long term loans to commercial banks
[D] the commercial banks are able to borrow overnight funds from RBI
Show Answer
Correct Answer: C [RBI lends long term loans to commercial banks ]
Notes:
Bank rate is the rate of interest which a central bank charges on the long term loans and advances that it extends to commercial banks and other financial intermediaries.
3. In an inflationary trend, the pricing of the bank products are:
[A] At increasing trend
[B] At decreasing trend
[C] No relevance of Inflation
[D] Constant
Show Answer
Correct Answer: A [At increasing trend]
Notes:
Inflation is the decline of purchasing power of a particular currency over time. It is reflected as an increase in general prices. As the demand for credit increases, the pricing of bank products also increases.
4. Which among the following effects will be seen on “deposit rates” if RBI tightens its policy?
[A] The deposit rates will increase
[B] The deposit rates will decrease
[C] The deposit rates will remain unaltered
[D] Either Increase or decrease
Show Answer
Correct Answer: A [The deposit rates will increase]
Notes:
When the Reserve Bank of India (RBI) tightens its monetary policy, it typically raises the repo rate, which is the rate at which banks borrow from the RBI. This increase in borrowing costs leads banks to offer higher deposit rates to attract more savings from customers. Higher deposit rates incentivize individuals to save more, thus increasing the overall liquidity in the banking system. Historically, when the RBI has tightened policy, deposit rates have often risen to reflect these changes.
5. Which among the following is / are Negotiable instrument ?
[A] Airway bill
[B] Bank Note
[C] Letter of credit
[D] Demand draft
Show Answer
Correct Answer: D [Demand draft]
Notes:
A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand or at a set time. Among the options: 1. Airway Bill: Not a negotiable instrument. it serves as a receipt for goods and a contract of carriage. 2. Bank Note: A negotiable instrument. it represents a promise to pay the bearer a specific amount. 3. Letter of Credit: Not a negotiable instrument. it is a financial document issued by a bank guaranteeing payment. 4. Demand Draft: A negotiable instrument. it is an order to pay a specific amount on demand. Thus, the correct answer is Demand Draft.
6. The Union Bank of India would like to use an account of State bank of India in Citibank of New York in dollars. For Union Bank of India it is a _________?
[A] NOSTRO account
[B] VOSTRO Account
[C] LORO Account
[D] Forex Account
Show Answer
Correct Answer: C [LORO Account]
Notes:
The correct answer is LORO Account. A LORO account refers to a foreign bank’s account held in another bank, typically used for international transactions. In this case, the Union Bank of India is using an account of the State Bank of India in Citibank, New York, which makes it a LORO account for Union Bank. Trivia: NOSTRO accounts are accounts a bank holds in foreign currency in another bank, while VOSTRO accounts are the opposite, representing foreign banks’ accounts held in the domestic bank.
7. What is the number of indicators in Multi-dimensional Poverty Index (MPI) ?
[A] 8
[B] 9
[C] 10
[D] 11
Show Answer
Correct Answer: C [10]
Notes:
The Multi-dimensional Poverty Index (MPI) uses three indicators to assess poverty: health, education, and living standards. Each of these dimensions is further broken down into specific indicators, but the MPI itself is structured around these three core areas. This index was developed by the Oxford Poverty and Human Development Initiative (OPHI) and is used to provide a more comprehensive understanding of poverty beyond income alone.
8. Economic Planning comes under which of the following lists ?
[A] Union List
[B] Concurrent list
[C] State List
[D] None of them
Show Answer
Correct Answer: B [Concurrent list]
Notes:
Economic Planning refers to any plans of economic activity which point to achieve specific social and economic outcomes. It is a subject matter of concurrent list in 7th schedule of Indian constitution.
9. The Reserve Bank of India works as a lender of the last resort (LOLR). Which among the following is the correct statement in this context?
[A] RBI meets all the demands of the commercial banks in times of difficulties
[B] RBI meets all the reasonable demands of the commercial banks in times of difficulties
[C] RBI is the last lender to the Government at the centre and the states
[D] RBI grants loans to the banks and also the Governments in states
Show Answer
Correct Answer: B [RBI meets all the reasonable demands of the commercial banks in times of difficulties]
Notes:
The banks can borrow from the RBI on the basis of eligible securities or any other arrangement and at the time of need or crisis, they approach RBI for financial help. Thus RBI works as Lender of the Last Resort (LORL) for banks.
10. Central Employment Guarantee Council overlooks the progress of which among the following scheme?
[A] MGNREGA
[B] Food for Works Programme
[C] National Rural Livelihood Mission
[D] All of them
Show Answer
Correct Answer: A [MGNREGA]
Notes:
Central Employment Guarantee Council was constituted under Section 10 of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005 to discharge the duties and functions under this act.
