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. Which among the following is considered to be the best measure of an increase in a country’s economic efficiency?
[A] Increase in annual private investment
[B] Increase in real national income
[C] Increase in real per capita income
[D] Increase in net annual investment
Show Answer
Correct Answer: C [Increase in real per capita income]
Notes:
Per capita income is a measure of the average income earned per person in a given area (usually in a country) in a particular year. When this figure is adjusted for inflation, the real per capita income is obtained, which gives the best measure of an increase in a country’s economic efficiency.
3. Which is the opposite activity of hedging in financial markets?
[A] Arbitrage
[B] Speculation
[C] Spread
[D] Short selling
Show Answer
Correct Answer: B [Speculation]
Notes:
Speculation involves taking positions to profit from expected price changes, accepting risk for potential gain. Hedging uses opposite positions to reduce price risk, while speculation increases risk exposure for possible reward. Both activities occur in securities, currency, and futures markets. Speculators provide market liquidity by accepting risk. Regulators monitor speculative activities to maintain market stability.
4. In which year, the practice of presenting the railway budget separate from the general budget (or vice versa in true sense) started in India?
[A] 1920
[B] 1924
[C] 1925
[D] 1930
Show Answer
Correct Answer: B [1924]
Notes:
In the year 1924, the practice of presenting the railway budget separately from the general budget (or vice versa in true sense) started in India.
5. Which among the following was previously known as Imperial Bank of India?
[A] State bank of India
[B] Reserve Bank of India
[C] Punjab National bank
[D] ICICI
Show Answer
Correct Answer: A [State bank of India]
Notes:
The correct answer is State Bank of India (SBI). It was established in 1955, evolving from the Imperial Bank of India, which itself was formed in 1921. The Imperial Bank was a successor to the Bank of Calcutta, founded in 1806, making SBI one of the oldest banks in India. SBI is now the largest bank in India, serving millions of customers worldwide.
6. 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.
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. Which among the following authority appoints a Deputy Governor in Reserve Bank of India?
[A] Governor of RBI
[B] Central Board of Directors
[C] Central Government
[D] Committee of the Central Board
Show Answer
Correct Answer: C [Central Government]
Notes:
The correct answer is “Central Government.” In India, the Deputy Governors of the Reserve Bank of India (RBI) are appointed by the Central Government under Section 8 of the Reserve Bank of India Act, 1934. The RBI has four Deputy Governors, and their roles include overseeing various departments such as monetary policy, financial markets, and banking regulation. This appointment process reflects the government’s influence on the central bank’s operations.
9. Who are eligible beneficiaries of the Reverse Mortgage Scheme?
[A] Government Employees
[B] Senior Citizens aged 60 years and above
[C] Unemployed Persons
[D] Working Professionals below 55 years
Show Answer
Correct Answer: B [Senior Citizens aged 60 years and above]
Notes:
The Reverse Mortgage Scheme in India was launched in 2007. The scheme targets senior citizens aged 60 years and above as beneficiaries. Joint borrowers may apply if at least one applicant is aged 60 years and the other not below 55 years. The scheme allows senior homeowners to mortgage property for regular payments from lenders. Ownership remains with the borrower during the loan tenure.
10. Which action increases cash reserves of commercial banks by RBI?
[A] Release gold from its reserves
[B] Purchase government securities in open market operations
[C] Prohibit bills of exchange transactions
[D] Increase IMF tranche reserves
Show Answer
Correct Answer: B [Purchase government securities in open market operations]
Notes:
The Reserve Bank of India increases cash reserves of commercial banks by purchasing government securities through open market operations. When government securities are purchased, funds are transferred to commercial banks, raising their cash reserves. OMOs are used by the RBI as a monetary policy instrument to regulate liquidity and money supply. As of 2023, RBI actively uses OMOs to manage system liquidity.
