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. Who among the following is called father of Economics?
[A] David Hume
[B] Lamarck
[C] Adam Smith
[D] John Stuart Mill
Show Answer
Correct Answer: C [Adam Smith]
Notes:
Adam smith is considered as father of Modern Economics. In his book “The nature & causes of wealth of the Nation’s 1776, he has described economics as science of wealth. According to him economy is the study of wealth only and it deals with its production and consumption. Only material goods which are scarce and useful are wealth.
2. Hindustan Shipyard Limited is located at?
[A] Kochi
[B] Mumbai
[C] Visakhapatnam
[D] Chennai
Show Answer
Correct Answer: C [Visakhapatnam]
Notes:
Hindustan Shipyard Limited is India’s shipbuilding company based in Visakhapatnam, Andhra Pradesh. It has long been associated with the eastern coast and operates from the port city of Visakhapatnam. The correct answer is therefore option 3. The company is a key defence shipyard and has played an important role in ship repair and ship construction activities for the Indian maritime sector.
3. In the abbreviation APEDA, what does P stand for ?
[A] Pisciculture
[B] Products
[C] Processed Food Products
[D] Promotion
Show Answer
Correct Answer: C [Processed Food Products]
Notes:
Agricultural and Processed Food Products Export Development Authority (APEDA) is an apex body under the Ministry of Commerce and Industry, Government of India, responsible for the export promotion of agricultural products. Its headquarters are located in New Delhi. It is a statutory body established under the Agricultural and Processed Food Products Export Development Authority Act passed by the Parliament in December, 1985.
4. A perfectly competitive firm maximizes its profit when _______?
[A] MR = AR
[B] MR = MC
[C] MC = AC
[D] MC = AR
Show Answer
Correct Answer: B [MR = MC]
Notes:
A perfectly competitive firm maximizes profit by producing at the output level where marginal revenue equals marginal cost. At this point, the firm has no incentive to increase or decrease output. Profit may be positive, zero, or negative in the short run; the equality MR = MC identifies the profit-maximizing quantity, not necessarily a positive profit.
5. Which among the following curve defines the principle that zero tax rate would produce zero revenue for the government and a 100% tax rate would also generate zero revenue for the taxing Government?
[A] Laffer curve
[B] Lorenz curve
[C] Engel curve
[D] Kuznets curve
Show Answer
Correct Answer: A [Laffer curve]
Notes:
The Laffer curve is a theoretical concept in economics that illustrates the relationship between tax rates and government revenue. The curve is named after economist Arthur Laffer, who popularized the concept in the 1970s. The basic idea behind the Laffer curve is that there is a certain tax rate that will maximize government revenue. At a 0% tax rate, the government will obviously not collect any revenue. At a 100% tax rate, the government will also not collect any revenue because people will have no incentive to work. The Laffer curve suggests that there is a point in between these two extremes where the government will collect the most revenue. The exact shape and location of the Laffer curve will vary depending on various factors, such as the state of the economy and the efficiency of the government’s tax collection system.
6. Any banking company can undertake any business other than the banking business in accordance with the provisions contained in which among the following acts?
[A] Reserve Bank of India Act
[B] Negotiable Instruments Act
[C] Banking Regulation Act
[D] None of the above
Show Answer
Correct Answer: C [Banking Regulation Act]
Notes:
The correct answer is the Banking Regulation Act. This act governs the operations of banking companies in India and allows them to engage in non-banking activities, provided these are in accordance with the provisions set forth. The act was enacted in 1949 to regulate the banking sector and ensure financial stability. It also empowers the Reserve Bank of India to oversee and regulate banking operations.
7. What is transfer pricing as per Indian taxation context?
[A] Method of tax evasion involving only illicit capital flows
[B] Mechanism for pricing transactions between associated enterprises
[C] Factor causing rise in food prices
[D] Recent cause of Indian banks’ bad loans
Show Answer
Correct Answer: B [Mechanism for pricing transactions between associated enterprises]
Notes:
Transfer pricing refers to pricing of transactions between associated enterprises, specified in Section 92 of the Income Tax Act, 1961. India implemented transfer pricing provisions in 2001 to prevent shifting profits to low-tax jurisdictions by related parties. The law requires use of the arm’s length principle for cross-border and certain domestic transactions between related parties.
8. What is a key feature of Interval Funds in financial markets?
[A] Provide capital appreciation over the medium to long-term
[B] Invest half in stock and half in commodity market
[C] Provide both growth and regular income
[D] Offer redemption at intervals with continuous share purchases
Show Answer
Correct Answer: D [Offer redemption at intervals with continuous share purchases]
Notes:
Interval funds are a hybrid of open-ended and closed-ended funds. They allow continuous purchases but restrict redemptions to specific intervals, usually monthly or quarterly. Redemptions are permitted only during these fixed periods. The Securities and Exchange Commission (SEC) regulates these funds in the United States. Interval funds are different from daily-liquid mutual funds.
9. What does Revenue Neutral Rate (RNR) mean?
[A] A policy where revenue receipts equal revenue expenditures
[B] A tax rate to ensure income tax equity
[C] A property tax rate generating same revenue as previous year
[D] A tax policy increasing revenue without hearings
Show Answer
Correct Answer: C [A property tax rate generating same revenue as previous year]
Notes:
The Revenue Neutral Rate is a property tax rate calculated so total tax revenue equals the previous year’s amount, based on current assessed property valuations. The formula is previous year’s tax revenue divided by current year’s assessed valuation, multiplied by 1,000. If property values increase, the RNR decreases to keep tax revenue flat.
10. Who publishes the annual Global Systemically Important Banks (G-SIBs) list?
[A] World Bank
[B] International Monetary Fund
[C] European Central Bank
[D] Financial Stability Board with Basel Committee
Show Answer
Correct Answer: D [Financial Stability Board with Basel Committee]
Notes:
The Financial Stability Board (FSB), in consultation with the Basel Committee on Banking Supervision (BCBS), publishes the annual list of Global Systemically Important Banks (G-SIBs). The publication is typically released each November. The FSB was established in 2009 as an international body. The BCBS was founded in 1974 to strengthen banking supervision worldwide.
