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 essential feature of a commercial bank?
[A] providing Locker facilities
[B] dealing with credit
[C] providing business information and data
[D] Sale of securities
Show Answer
Correct Answer: B [dealing with credit]
Notes:
Section 5 of Banking Regulation Act 1949 defines Banking as the act of accepting deposits for the purpose of lending. Commercial banks deal with money, accepts deposits and advance short-term loans / credits.
2. An investor or speculator who subscribes to a new issue with the intention of selling them soon after allotment to realize a quick profit is called?
[A] Stag
[B] Tall
[C] Bull
[D] Bear
Show Answer
Correct Answer: A [Stag]
Notes:
The term stag means a speculator who buys and sells stocks in short timeframes to make quick profits. The motove of stag is to make profit quickly on a fast moving trend, rather than buying and holding for the long run.
3. Which among the following is called India’s market watch dog?
[A] RBI
[B] SEBI
[C] NABARD
[D] SBI
Show Answer
Correct Answer: B [SEBI]
Notes:
The correct answer is SEBI (Securities and Exchange Board of India). SEBI was established in 1988 and became a statutory body in 1992. It regulates the securities market in India, protecting investor interests and promoting the development of the market. The RBI (Reserve Bank of India) primarily oversees monetary policy and banking regulation, while BSE (Bombay Stock Exchange) is a stock exchange, not a regulatory body.
4. Which among the following is used for a situation of “Too much money chasing too few goods?
[A] Demand Pull Inflation
[B] Cost pull inflation
[C] Stagflation
[D] Hyperinflation
Show Answer
Correct Answer: A [Demand Pull Inflation]
Notes:
Demand-pull inflation refers to the inflation from rapid growth in aggregate demand and when excess demand causes ‘too much money chasing too few goods.’ This generally happens when an economy is growing at a faster rate.
5. The targets from fifth five year plan were set with respect to which of the following parameters?
[A] National Income
[B] Net Domestic Product
[C] Gross Domestic Product at Factor Cost
[D] Gross Domestic Product at Market Cost
Show Answer
Correct Answer: C [Gross Domestic Product at Factor Cost]
Notes:
Targets for the first three plans were set with respect to National Income. Fourth Plan it was Net Domestic Product. In all Plans thereafter it has been Gross Domestic Product at factor cost.
6. Approval of which among the following is needed to draw funds from Consolidated Fund of India?
[A] President
[B] Parliament
[C] Council of Ministers
[D] All the above
Show Answer
Correct Answer: B [Parliament]
Notes:
The Consolidated Fund of India was created under Article 266 of the Indian Constitution. The government meets all its expenditure from this fund and it needs parliamentary approval to withdraw money from this fund.
7. What typically happens when economic growth exceeds its potential rate?
[A] Only demand creates inflationary pressure
[B] Only wage rises cause inflation
[C] Only input costs increase due to growth
[D] All of the above factors contribute
Show Answer
Correct Answer: D [All of the above factors contribute]
Notes:
When economic growth surpasses its potential rate, inflation arises from interconnected mechanisms, including demand exceeding supply, labor market tightening causing wage increases, and cost-push pressures such as rising input costs. These channels simultaneously contribute to overall inflation in the economy.
8. The Financial Stability Board (FSB) is mainly linked to which group of countries?
[A] BRICS Nations
[B] G-20 Countries
[C] SAARC Countries
[D] APEC Members
Show Answer
Correct Answer: B [G-20 Countries]
Notes:
The Financial Stability Board was established in 2009 after the G20 Pittsburgh Summit. It succeeded the Financial Stability Forum. The Board includes all G20 major economies, FSF members, and the European Commission. The Board is hosted by the Bank for International Settlements in Basel, Switzerland. The FSB’s formation and mandate are directly associated with the G-20 group of countries.
9. The Integrated Child Development Services (ICDS) Scheme aims to improve the nutritional and health status of children in the age-group of _?
[A] 0-6 years
[B] 0-10 years
[C] 0-14 years
[D] 6-14 years
Show Answer
Correct Answer: A [0-6 years]
Notes:
The ICDS Scheme offers a package of six services, viz. Supplementary Nutrition; Pre-school non-formal education; Nutrition & health education; Immunization; Health check-up and Referral services. This programme was launched on 2nd October, 1975, as one of the flagship programmes of the Government of India and represents one of the world’s largest and unique programmes for early childhood care and development. The Integrated Child Development Services (ICDS) Scheme is a centrally sponsored Scheme implemented by States/UTs across the country.
10. Which type of foreign exchange rate system does India follow?
[A] Fixed
[B] Free float
[C] Managed float
[D] Fixed target band
Show Answer
Correct Answer: C [Managed float]
Notes:
India has a managed floating exchange rate system since 1994. The Reserve Bank of India intervenes in the foreign exchange market to reduce excessive volatility. The rupee exchange rate is mainly determined by market demand and supply. The system allows daily fluctuations, with the RBI entering the market when necessary to maintain orderly conditions.
