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 can be called a Balanced Budget ?
[A] Total Revenue of the Government Exceeding Total Expenditure
[B] Total Expenditure of the Government Exceeding Total Revenue
[C] Total Revenue of the Government exactly equal to total Expenditure
[D] Total Expenditure of the Government exceeding or equal to Total Revenue
Show Answer
Correct Answer: C [Total Revenue of the Government exactly equal to total Expenditure]
Notes:
A balanced budget is a budget in which revenues are equal to expenditures. This means that the government is not spending more money than it is bringing in, and it is not running a deficit. A balanced budget is typically seen as a positive thing, because it means that the government is not taking on more debt in order to fund its operations.
2. As a wholly owned subsidiary of which of the following, the Small Industries Development Bank of India (SIDBI) was started in 1990?
[A] Industrial Investment bank of India Ltd
[B] Industrial Finance Corporation of India
[C] Industrial Development Bank of India
[D] Reserve Bank of India
Show Answer
Correct Answer: C [Industrial Development Bank of India]
Notes:
The Small Industries Development Bank of India (SIDBI) was established in 1990 as a wholly owned subsidiary of the Industrial Development Bank of India (IDBI). SIDBI’s primary role is to promote and finance small-scale industries in India, facilitating their growth and development. IDBI itself was established in 1964 to provide credit and development support to the industrial sector.
3. Which among the following would result in the fall in asset prices?
[A] Low Liquidity in the Economy
[B] High Liquidity in the Economy
[C] RBI increasing the Reverse Repo Rates
[D] RBI allows more banks to play
Show Answer
Correct Answer: A [Low Liquidity in the Economy]
Notes:
Low liquidity in the economy means there is less money available for lending and investment. This scarcity can lead to decreased demand for assets, causing their prices to fall. In contrast, high liquidity typically boosts asset prices as more money circulates. The Reserve Bank of India (RBI) increasing reverse repo rates encourages banks to park funds with the RBI rather than lending them out, which can also reduce liquidity. Historically, low liquidity has been linked to economic downturns, leading to asset price declines.
4. Foreign Direct Investment(FDI) and Foreign Institutional Investment(FII) are distinct in terms of?
[A] FDI brings capital, technology & management and FII brings only capital
[B] FDI targets specific sectors and FII help in increasing foreign capital availability
[C] FII is considered more stable
[D] FII targets both primary and secondary market while FDI targets only primary.
Show Answer
Correct Answer: A [FDI brings capital, technology & management and FII brings only capital]
Notes:
Foreign Direct Investment (FDI) involves long-term investments in physical assets, bringing capital, technology, and management expertise to a country. In contrast, Foreign Institutional Investment (FII) primarily involves short-term capital investments in financial markets, such as stocks and bonds, without direct control over businesses. FDI is typically more stable and less volatile than FII, which can quickly exit markets, impacting local economies. FDI often targets specific sectors for development, while FII can invest across various market segments.
5. Labour force participation rate reflects__:
[A] The persons who express their willingness to work
[B] The persons who are employed
[C] The persons who are capable to work but not willing to workÂ
[D] None of them
Show Answer
Correct Answer: A [ The persons who express their willingness to work ]
Notes:
Labour force participation rate reflects the persons who express their willingness to work.
6. Which statement best describes the term “Transfer Pricing” that India is contending with?
[A] It is a tax evasion method involving illicit capital flows out of the country
[B] It is a factor causing the continuous rise in food prices in India
[C] It is a recent phenomenon resulting in the bad loans of Indian banks
[D] It is a global phenomenon causing the devaluation of the Indian currency against reserve currencies
Show Answer
Correct Answer: A [It is a tax evasion method involving illicit capital flows out of the country]
Notes:
Transfer pricing refers to the pricing of goods or services within a multinational corporation or group. These transactions may not be influenced by market forces that typically shape relations between individual firms. This system allows for a possible method of tax evasion, where one party transfers goods or services to another for a specific price, often facilitating illicit capital flows out of the country.
7. Consider the following:
- Real Estate Investment Trust
- Railway operation
- Atomic Energy
As of now, there is no FDI in India, in which of above sector(s)?
[A] 1 Only
[B] 1 & 2 Only
[C] 1, 2 & 3
[D] None
Show Answer
Correct Answer: C [ 1, 2 & 3 ]
Notes:
FDI is prohibited in lottery, gambling, atomic energy, Real Estate Investment Trust & Railway operation.
8. World Investment Report is published by:
[A] International Monetary Fund
[B] World Economic Forum
[C] Organisation for Economic Co-operation and Development (OECD)
[D] United Nations Conference on Trade and Development (UNCTAD)
Show Answer
Correct Answer: D [ United Nations Conference on Trade and Development (UNCTAD) ]
Notes:
The World Investment Report has been published annually since 1991 by the United Nations Conference on Trade and Development (UNCTAD). The report focuses on trends in foreign direct investment (FDI) worldwide, at the regional and country levels and emerging measures to improve its contribution.
9. Which of the following is / are correct statements about “Adopt a Heritage Scheme”?
- It is an initiative under Ministry of Culture
- Under this scheme, government has appointed private as well as public companies as “Monument Mitras” to boost heritage tourism in the country
Select the correct option from the codes given below:
[A] Only 1
[B] Only 2
[C] Both 1 & 2
[D] Neither 1 nor 2
Show Answer
Correct Answer: B [Only 2 ]
Notes:
First statement is incorrect. The “Adopt a Heritage Scheme” is an initiative under Ministry of Tourism. Second statement is correct. Under this scheme, the government has appointed private as well as public companies as “Monument Mitras” for making heritage tourism more sustainable through conservation and development. The short-listed companies, to be called Monument Mitras, are from various sectors such as hospitality, travel, and banking.
10. Which of the following is the biggest contributor to the Foreign Reserve of India?
[A] Gold
[B] Foreign Assets
[C] SDR
[D] Reserve Tranche with IMF
Show Answer
Correct Answer: B [Foreign Assets]
Notes:
India’s forex reserves stood at USD 547.25 billion for the week ended November 18, 2022. The major component of this is Foreign Currency Assets (FCA) which stands at USD 484.29 billion, followed by Gold Reserves at USD 40.01 billion and Special Drawing Rights (SDRs) at USD 17.906 billion.
