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 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.
2. Which among the following organizations calculates and publishes LIBOR (London Interbank Offered Rate)?
[A] Bank of England
[B] Thomson Reuters
[C] European Banking Federation
[D] European Central Bank
Show Answer
Correct Answer: B [Thomson Reuters]
Notes:
The London Inter-bank Offered Rate (LIBOR) is the average interest-rate calculated from estimates submitted by the leading banks in London. The rates are calculated and published by Thomson Reuters Corporation.
3. Which among the following is a suitable term for the state of economy in which economic activity is slowing down but wages and prices continue to rise ?
[A] Inflation
[B] Deflation
[C] Skweflation
[D] Stagflation
Show Answer
Correct Answer: D [Stagflation]
Notes:
Stagflation refers to persistent high inflation coupled with high unemployment and stagnant demand /growth in economy.
High Inflation + Low Economic Growth {or conditions of recession} + Low Employment Generation = Stagflation
4. 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.
5. The government has responsibility to ensure availability of which among the following to all consumers regardless of their ability to pay price?
[A] Giffen Goods
[B] Supplementary Goods
[C] Merit Goods
[D] Complementary Goods
Show Answer
Correct Answer: C [Merit Goods]
Notes:
The correct answer is Merit Goods. Merit goods are products or services that the government believes are beneficial for individuals and society, and thus should be available to all, regardless of their ability to pay. Examples include education and healthcare. Governments often subsidize these goods to ensure equitable access, as they can lead to positive externalities, such as a more educated workforce and improved public health.
6. What is the meaning of the “Government Route” in Foreign Investments?
[A] Investments without government approval.
[B] Investments made by government.
[C] Investments that requires prior government approval
[D] Foreign investments in government bonds
Show Answer
Correct Answer: C [Investments that requires prior government approval]
Notes:
The “Government Route” in the language of foreign investments refers to the scenario where a foreign investor needs to acquire prior approval from the government to make an investment. This route is usually applicable for sectors which are of strategic importance or have implications for national security, where it would be imperative for the host country to have an additional level of scrutiny and control.
7. 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.
8. Which among the following is terms is commonly not assciated with Budgets in India?
[A] Outcome Budget
[B] Gender Budget
[C] Austerity Budget
[D] Gross Budgetary Support
Show Answer
Correct Answer: C [Austerity Budget]
Notes:
The term “Austerity Budget” is commonly not associated with budgets in India. While India has implemented various budget types, such as Outcome Budgets (which focus on results and accountability) and Gender Budgets (which aim to address gender disparities), “Austerity Budget” is less prevalent. Austerity measures are typically associated with economic crises and are not a standard budget classification in India. The Gross Budgetary Support refers to the total allocation for government programs and is a recognized term.
9. Which among the following bodies regulated the cooperative banks in India?
[A] Reserve Bank of India
[B] Small Industries Development Bank of India
[C] National Bank for Agriculture and Rural Development
[D] National Cooperative Union of India
Show Answer
Correct Answer: A [ Reserve Bank of India ]
Notes:
As per the Cooperative Societies Act, Reserve Bank of India (RBI) regulates the cooperative banks and these are governed by the Banking Regulations Act, 1949 and the Banking Laws (Cooperative Societies) Act, 1965.
10. The expenditure done by the government on the MGNREGA scheme comes under the:
1. Revenue expenditure
2. Capital Expenditure
3. Planned Expenditure
4. Non Planned expenditure
Choose the correct option from the codes given below:
[A] Only 1 & 3
[B] Only 1, 2 & 3
[C] Only 1 & 4
[D] Only 1, 2 & 4
Show Answer
Correct Answer: B [ Only 1, 2 & 3 ]
Notes:
There are two different sets of classifications ‘revenue vs capital expenditure’ and ‘ plan vs non-plan.’
In general, expenditure used to create assets (building a road for instance) is capital expenditure while revenue expenditure consists of expenses such as salaries and other administrative costs. Plan expenditure covers money spent on schemes or projects run by different ministries under the five-year plans.
Schemes Such as the MG National Rural Employment Guarantee Scheme can have both revenue and capital components. For instance, the administrative costs of a plan scheme could be classified as revenue expenditure while the expenditure on the scheme itself (e.g. building a village road) might be capital expenditure. Non-plan expenditure consists of any expenditure by the government not covered by the five year plans. These include interest payments on government debt and expenditure on organs of the state such as the judiciary and the police.
