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 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.
2. Which of the following indices measures gender inequalities in human development achievements across health, education, and economic resources?
[A] Gender Inequality Index
[B] Gender Development Index
[C] Gender Empowerment Measure
[D] Human Development Index
Show Answer
Correct Answer: B [Gender Development Index]
Notes:
The Gender Development Index was introduced by UNDP in 1995. It assesses gender gaps in health (life expectancy at birth), education (years of schooling), and income (estimated earned income). GDI uses the ratio of female to male Human Development Index values. A value of 1 indicates gender parity. It was released with the Gender Empowerment Measure. The Gender Inequality Index was introduced in 2010 and includes reproductive health and labour market participation.
3. When does RBI sell government securities via Open Market Operations?
[A] During liquidity deficit from heavy government borrowing
[B] When foreign funds inflow is low
[C] When banks face fund shortages
[D] During surplus liquidity from large foreign capital inflows
Show Answer
Correct Answer: D [During surplus liquidity from large foreign capital inflows]
Notes:
The Reserve Bank of India conducts Open Market Operations to manage liquidity. It sells government securities when there is surplus liquidity, such as during large foreign capital inflows that increase rupee supply. Selling securities absorbs excess funds from the banking system. In periods of liquidity shortage, RBI buys securities. In FY26, liquidity injections were handled through purchases, not sales.
4. What was the nationality of Mahbub ul Haq, one of the pioneers of Human development theory and co-founder of the Human Development Report?
[A] Uk
[B] USA
[C] Pakistan
[D] India
Show Answer
Correct Answer: C [Pakistan]
Notes:
Human Development Report was first launched in 1990 by the Pakistani Economist Mahbub ul Haq and Indian Nobel laureate Amartya Sen.
5. Which is NOT a qualitative instrument of credit control in India?
[A] Moral Suasion
[B] Credit Rationing
[C] Cash Reserve Ratio (CRR)
[D] Margin Requirements
Show Answer
Correct Answer: C [Cash Reserve Ratio (CRR)]
Notes:
Cash Reserve Ratio (CRR) is a quantitative instrument set by the Reserve Bank of India under Section 42(1) of the RBI Act, 1934. CRR mandates banks to keep a percentage of deposits with RBI in cash. It controls the total volume of credit by affecting banks’ lending power. Qualitative credit control instruments in India include moral suasion, credit rationing, and margin requirements.
6. With reference to the business, what is working capital?
[A] The investment made in the business
[B] Fixed assets
[C] Circulating assets- stocks, cash and debts owed to the business
[D] Amount spent on machinery or for building up stock
Show Answer
Correct Answer: C [ Circulating assets- stocks, cash and debts owed to the business ]
Notes:
Current Assets minus Current Liabilities is known as working capital.
7. Which of the following is / are auctioned in Open Market Operations?
[A] Shares
[B] Debentures
[C] Securities
[D] Bullion
Show Answer
Correct Answer: C [ Securities ]
Notes:
Open Market Operations refer to the purchase and sale of the Government securities (G-Secs) by RBI from / to market.
8. What is the objective of the Central Government in creating the “Non-lapsable Central Pool of Resources”?
[A] To provide development funding in Naxalite affected areas
[B] To provide additional development grant to most backward 200 districts all over country
[C] To provide time to time fiscal stimulation to the economy
[D] To provide development funding to North East and Sikkim
Show Answer
Correct Answer: D [ To provide development funding to North East and Sikkim ]
Notes:
NLCPR The broad objective of the Non-Lapsable Central Pool of Resources (NLCPR) is to ensure speedy development of infrastructure in the North Eastern Region and Sikkim by increasing the flow of budgetary financing for specific viable infrastructure projects/schemes in the region. The provision is for funding these projects. The outlay includes a provision of Rs. 50 crore for funding special projects/schemes for the economic development of the Karbi Anglong Autonomous Territorial Council (KAATC) area in Assam.
9. Which is the last resort in deficit financing by the government?
[A] Borrowing from Foreign Sources
[B] Borrowing from Domestic Sources
[C] Printing of Currency (Monetizing the Debt)
[D] External Grants
Show Answer
Correct Answer: C [Printing of Currency (Monetizing the Debt)]
Notes:
Printing of currency, or monetizing the debt, is used by the government as a last resort in deficit financing. The Reserve Bank of India can create new money to buy government bonds if other options are insufficient. Excessive currency printing can lead to inflation and has been used rarely since the 1997 agreement between the Government of India and RBI to limit monetization.
10. Directorate General of foreign Trade (DGFT) functions under which of the following ministries?
[A] Ministry of Commerce and Industry
[B] Ministry of Finance
[C] Home Ministry
[D] Ministry of Finance
Show Answer
Correct Answer: A [ Ministry of Commerce and Industry ]
Notes:
The Directorate General of foreign Trade (DGFT) is the agency of the Ministry of Commerce and Industry of the Government of India, responsible for execution of the import and export Policies of India.
