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. On which of the following Date a Bank publishes its balance sheet ?
[A] March 31
[B] April 1
[C] December 31
[D] January 1
Show Answer
Correct Answer: A [March 31]
Notes:
The financial year of India begins from April 1 of a calendar year and ends on March 31 of the next calendar year. This system has been into existence since the British Raj in India. Hence, Banks in India publish their financial statements / balance sheets for March 31st of every year.
2. Who among the following was the first Deputy Chairman of the Planning commission ?
[A] V.T. Krishnamachari
[B] C.M. Trivedi
[C] Gulzari Lal Nanda
[D] Ashok Mehta
Show Answer
Correct Answer: C [Gulzari Lal Nanda]
Notes:
Gulzari Lal Nanda was first deputy chairman of erstwhile Planning Commission. He later became Prime Minister of India.
3. Narsimham Committee Report 1991 was related to which of the following ?
[A] Agriculture Reforms
[B] Trade Reforms
[C] Tax Reforms
[D] Financial Sector reforms
Show Answer
Correct Answer: D [Financial Sector reforms]
Notes:
In 1991 The Reserve Bank of India had proposed the committee chaired by M. Narasimham, former RBI Governor to review the Financial System and aspects relating to the Structure, Organization, Procedures and Functioning of the financial system. Committee submitted two reports, in 1992 and 1998, which laid significant thrust on enhancing the efficiency and viability of the banking sector. The Narasimham Committee laid the foundation for the reformation of the Indian banking sector.
4. Which of the following Government gets the stamp duty collected on promissory notes?
[A] State Government 100%
[B] Central Government 100 %
[C] State Government 50% and Central Government 50%
[D] State Government 25% and Central Government 75%
Show Answer
Correct Answer: A [State Government 100%]
Notes:
The correct answer is “State Government 100%.” In India, stamp duty on promissory notes is governed by the Stamp Act of 1899, which allows state governments to levy stamp duty. Each state has the authority to set its own rates, and the revenue collected from stamp duty is retained entirely by the state government. This is a important source of revenue for states, contributing to their financial resources for development and public services.
5. In India, which among the following decides the savings bank rate?
[A] Central Government
[B] Banks themselves
[C] Reserve Bank of India
[D] Commercial Banks
Show Answer
Correct Answer: B [Banks themselves]
Notes:
The banks themselves fix the interest rates on saving accounts.
6. 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.
7. Collateralized Borrowing and Lending Obligation (CBLO) is a ____?
[A] Money Market Instrument
[B] Monetary Policy Instrument
[C] Investment fund
[D] Capital Market Instrument
Show Answer
Correct Answer: A [Money Market Instrument]
Notes:
Collateralized Borrowing and Lending Obligation (CBLO) is a money market instrument. It represents the terms and conditions of a loan between a borrower and a lender. CBLO is a short-term investment option that allows investors to earn interest on their excess funds. It also provides a source of short-term funding for borrowers.
CBLO is a discounted instrument that is available in electronic book entry form. The maturity period ranges from one day to one year.
CBLO is a low-risk instrument because it is adequately backed by collateral. It is also a short-term investment option, which means that investors can quickly liquidate their investment if needed.
CBLO is the largest overnight segment in India.
8. Economic growth is normally coupled with?
[A] Inflation
[B] Hyper Inflation
[C] Deflation
[D] Stagflation
Show Answer
Correct Answer: A [Inflation]
Notes:
Economic growth results in higher disposable income available with the consumers which increases the overall demand along with the supply available for the consumers. This increase in demand spurs inflation, which eventually becomes a necessary evil for a growing economy.
9. If the Reserve Bank of India wants to increase the Cash Reserves commercial Banks, which among the following would be the most probable step taken by it ?
[A] Release Gold from its reserves
[B] Buy bonds in the open market
[C] Prohibit the transactions that involve bill of exchange
[D] Increase the tranche reserves with the IMF
Show Answer
Correct Answer: B [Buy bonds in the open market]
Notes:
When RBI buys bonds in the open market, Banks get money and Cash Reserves would increase.
10. Which of the following Price Indices of India is considered for measuring ‘Headline Inflation’?
[A] GDP Deflator
[B] CPI-AL/RL
[C] CPI-IW
[D] WPI
Show Answer
Correct Answer: D [WPI]
Notes:
The correct answer is WPI (Wholesale Price Index). Headline inflation in India is primarily measured using the WPI, which reflects the price changes at the wholesale level for a basket of goods. The WPI includes prices of commodities like food, fuel, and manufactured goods, making it a comprehensive measure of inflation. In contrast, the CPI (Consumer Price Index) focuses on retail prices and consumer goods, while the GDP deflator measures price changes in all domestically produced goods and services. The WPI has been used in India since 1978, and it is crucial for policymakers to gauge inflation trends.