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 of the following pairings does not represent a set of complementary goods?
[A] Printers and Ink Cartridges
[B] Tea and Sugar
[C] Mobile Phones and SIM cards
[D] Tea and Coffee
Show Answer
Correct Answer: D [Tea and Coffee]
Notes:
Complementary goods, defined by their negative cross elasticity of demand, are products whose demand is influenced by one another. When the price of a good declines, the demand for its complementary good rises. Printers need ink cartridges, tea is often consumed with sugar, and mobile phones require SIM cards for operation. However, tea and coffee are substitutes, not complements, as they are consumed separately and often in place of one another, hence they are not complementary goods.
2. With reference to the Union Budget of India, the expenditure classification follows which of the following broad categories?
[A] Revenue expenditure and Capital expenditure
[B] Plan expenditure and Non-Plan expenditure
[C] Developmental expenditure and Non-developmental expenditure
[D] Borrowed expenditure and Tax-funded expenditure
Show Answer
Correct Answer: A [Revenue expenditure and Capital expenditure]
Notes:
From Budget 2017-18 onward, the Government of India did away with the Plan and Non-Plan classification of expenditure. The budget now uses the more standard and meaningful classification into Revenue expenditure and Capital expenditure, which better reflects the nature of government spending.
3. 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.
4. During which five year plan The Khadi and Village Industries Commission was established ?
[A] First Five year Plan
[B] Second Five year Plan
[C] Third Five year Plan
[D] Fourth Five Year Plan
Show Answer
Correct Answer: B [Second Five year Plan]
Notes:
The Khadi and Village Industries Commission is a statutory body formed in April 1957 by the Government of India, under the Act of Parliament, ‘Khadi and Village Industries Commission Act of 1956’. It was second five year plan period then.
5. Consider the following:
- Foreign Direct Investments
- Foreign Institutional Investments
- American Depository Receipts
- Global Depository Receipts
In the context of “Sources of Foreign Exchange Reserves,” which of the above are placed under Portfolio Investment?
[A] 2, 3 and 4
[B] 1, 2 and 3
[C] 1 and 4
[D] 1 only
Show Answer
Correct Answer: A [2, 3 and 4]
Notes:
Portfolio investments comprise financial assets such as stocks, bonds, and depository receipts. Foreign Institutional Investments (FII), American Depository Receipts (ADR), and Global Depository Receipts (GDR) are all considered portfolio investments because they do not confer direct control over the underlying asset or enterprise, whereas Foreign Direct Investments involve ownership and control, and are not part of portfolio investment.
6. Which of the following statements is correct about the Countervailing duty?
[A] It is the tariff levied on imported goods to offset subsidies offered by the exporting country to its producers
[B] It is the tariff imposed on exported goods to reduce exports and increase the domestic supply
[C] It is the tax levied on revenues received by a corporation, even if it does not make any profit
[D] It is the tax levied on purchase or sale of various financial products like stocks, derivatives, mutual funds etc
Show Answer
Correct Answer: A [ It is the tariff levied on imported goods to offset subsidies offered by the exporting country to its producers ]
Notes:
First option is the correct answer
Countervailing duty is a tariff imposed on imported goods to offset the subsidies offered by the exporting country to its producers. It is imposed to provide level playing field to domestic producers and foreign producers.
7. Micro credit or micro finance is a novel approach to bank with the poor. In this approach bank credit is extended to the poor through which of the follwing?
[A] Self Help Groups
[B] Anganwadees
[C] Co-operative Credit Societies
[D] RBI
Show Answer
Correct Answer: A [Self Help Groups]
Notes:
Microfinance is a category of financial services targeted at individuals and small businesses who lack access to conventional banking and related services.
8. Which among the following is not an instrument of fiscal policy?
[A] Taxation
[B] Public expenditure
[C] Public debt
[D] Credit Rationing
Show Answer
Correct Answer: D [Credit Rationing]
Notes:
The 3 main instruments of fiscal policy are government taxation and public expenditure and public debt. Fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation’s economy.
9. Real National income increases in which of the following circumstances?
[A] When Prices of goods increases
[B] When saving of people increases
[C] When Inflation increases prices and taxes
[D] When the production of goods and services increases
Show Answer
Correct Answer: D [When the production of goods and services increases]
Notes:
As the calculation of national income is the total value of all goods and services in an economy the real increase happens when the output production increases. The rate change won’t affect because while calculating real national income we take into account the prices of base year. So even the inflation effect is also removed.
10. Which of the following are the methods of poverty estimation?
[A] Sen Index
[B] Multidimensional poverty index
[C] Poverty gap Index
[D] All of the above
Show Answer
Correct Answer: D [All of the above]
Notes:
Amartya Sen, noted Nobel Laureate, has developed an index known as Sen Index to estimate the poverty.
The Global Multidimensional Poverty Index (MPI) was developed in 2010 by the Oxford Poverty & Human Development Initiative (OPHI) and the United Nations Development Programme and uses health, education, and standard of living indicators to determine the degree of poverty experienced by a population.
The poverty gap index is a measure of the intensity of poverty.
